If you haven’t heard about modern monetary theory yet, you probably will as the Democratic presidential primary heats up.
Generally, MMT rejects the idea of the federal government being like an ordinary household that can run out of money. There are inflationary constraints, but MMT argues that a government like the United States is able to spend more.
This idea helps power the Green New Deal and other big but expensive Democratic priorities like a federal job guarantee.
And one of the leading proponents of it is New York resident Stephanie Kelton.
Kelton, an academic who was chief economist to the Democrats on the Senate budget committee and an economic adviser to Sen. Bernie Sanders’ 2016 campaign, became a professor at Stony Brook University on Long Island in 2017.
Kelton has advised politicians and made the case for MMT for years. Her speaking calendar is booked months out. Earlier this year, she says she talked policy with senior staff of NYC Mayor Bill de Blasio, who has been pondering a presidential run. (She called his staff “exceptionally bright.”)
Her path to Long Island started with her husband, Paul Kelton, who she says was initially recruited to be an endowed chair in American history at Stony Brook. In an article on Stony Brook’s website, Michael A. Bernstein, provost and senior vice president for academic affairs, called the Keltons’ arrival “one of those serendipitous moments when we could undertake a dual recruitment that worked dramatically for the institution as a whole.”
Many mainstream or more centrist economists have their doubts about MMT, but some have been warming to the issue, with caveats or jokes. Last week, MMT was described as a “package of eccentric ideas” in a New York Times article about its tentative embrace by Wall Streeters.
In the political sphere, MMT has been supported or praised by the likes of Sen. Elizabeth Warren (D-Mass.) and Rep. Alexandria Ocasio-Cortez (D-Bronx/Queens), who told Business Insider she was open to the theory being “a larger part of our conversation.”
Cue the essays and criticisms and defenses, from Jacobin to the Economist, none of which seem likely to end soon.
With left-leaning Democrats eager to embrace or at least debate her ideas and some Republicans becoming less outspoken about the dangers of high federal debt, Kelton is in high demand. Asked whether she’d take a job in D.C. in a new administration, Kelton said it would have to be the right one, given the difficulty of leaving community and family (her kids are age 13 and 11). She did that once before for the Senate job and called it “tough.”
For now, she says she’s happy teaching courses in economics and political science. “I get to do two things that I love.” Plus the phone keeps ringing.