How do you get socialism in America? Green New Deal, Modern Monetary Theory (MMT)

By: Mark Hendrickson

Thank you, Representative Alexandria Ocasio-Cortez. The Green New Deal (GND) she has unveiled is most illuminating. It is now unmistakably clear that AOC, Bernie Sanders, and other democratic socialists in the Democratic Party don’t want “socialism lite” but rather they want the federal government to take control of the “commanding heights” of the economy. Although they may settle for the variant of socialism in which businesses remain nominally private, even as the government dictates what they must do, they plainly want central economic planning, albeit with a 10-year rather than five-year plan.

This is no exaggeration. The GND essentially calls for conscripting the American workforce and putting us to work in accordance with what the elite government planners want instead of what “we, the people” want. They propose to replace our market economy, in which privately owned businesses compete to see who can best supply the needs and wants of the people, with a command economy in which government is the master and citizens build what the planners say must be built.

Here are some planks in AOC’s GND:

• The elimination of fossil fuels in 10 years, which would entail the closing of all gas stations, replacing them with electric-charging stations; replacing or retooling tens of millions of vehicles that travel by land, sea, or air (with the alarming acknowledgment “we aren’t sure that we’ll be able to get rid of … airplanes [in 10 years]”); replacing all power plants that use fossil fuels with wind and solar, and eliminating all jobs involved in the exploration, extraction, refining, and transportation of fossil fuels.
• “Retrofit every building in America.”
• “Overhaul … agriculture.”
• “Provide job training and education to all.”
• “Guarantee a job with family-sustaining wages”
• “Provide high-quality health care [and] housing.”
• “Ensure universal access to healthy food …” and much, much more.

What the GND proposes — essentially, rebuilding America’s physical plant and infrastructure from top to bottom — is physically impossible to do in 10 years. In fact, it couldn’t be done in 100 years. The economy would collapse long before then in the chaos that socialist economies always experience as the inevitable consequence of replacing market prices with government edicts.

The GND is economically impossible, too, although its proponents seem to think that they can bypass economic reality by implementing what is called MMT—Modern Monetary Theory, a new label for the old, failed practice of printing more money.

In everyday economic life, money acts like a claim on goods and services; if you have enough of it, you can obtain what you want. Under MMT, the government has access to as many fiat dollars as it wants — a virtually unlimited supply. (Fiat currencies are not backed by anything material but are created out of thin air and rely on legal tender laws to compel people to accept them as payment for goods and services.) Using its monopoly power over money, MMT in practice would give the federal government unlimited purchasing power. That would enable the government to outbid all private interests for labor, materials, equipment, etc. In short, what the government wants, the government gets, and private individuals and businesses are correspondingly deprived.

What about inflation — wouldn’t printing all those additional fiat dollars cause prices to rise? According to MMT, the government can prevent inflation by draining purchasing power away from the private sector through higher taxes. Thus, while printing more money increases the government’s purchasing power, inflationary pressures would be offset as government removes purchasing power from the private sector. MMT is a game rigged so that the government always wins and the private sector always loses. No wonder socialists love MMT!

There is a well-known word that describes overwhelming power that government wields over people: tyranny. MMT boils down to government using its monopoly over money to dictate and control production, obliterate free markets, suppress private enterprise, and impoverish the people — i.e., socialism. A more apt name for MMT is Money Monopoly Tyranny. Indeed, MMT is a destructive tool tailor-made to assist the implementation of the socialistic Green New Deal.

This was originally posted on Mises.org.