Marco Rubio Puts Out a Paper Citing Obscure Left-Wing Economists
(Bloomberg) -- It looks like Marco Rubio didn’t get the memo about Modern Monetary Theory.
His Republican colleagues in the House and Senate are busy circulating resolutions, or organizing hearings, that denounce the doctrine as a threat to the U.S. economy. But the Florida senator published a 40-page report this week lamenting the decline in American investment, and it draws heavily on ideas associated with MMT.
Rubio, who’s joined a bipartisan effort to dissuade companies from spending so much money buying back their own shares, argues that American business is drifting away from its traditional role as the engine of capital investment. Instead of borrowing to build things, he says, many non-financial corporations have effectively become lenders -- behaving more like banks and leaving government to fill the gap with budget deficits.
Just as striking as the thesis is the range of sources invoked. Rubio’s report cites Randall Wray, one of the founders of MMT, and Hyman Minsky, the American economist reckoned to be the doctrine’s godfather. It also draws on work by the British-Canadian duo Wynne Godley and Marc Lavoie, whose framework for the way governments, businesses and trade partners interact -- known as sectoral balances -- has influenced MMT and Goldman Sachs economists.
The references extend well beyond MMT. It’s probably not unusual for a U.S. senator to cite Adam Smith, founder of free-market economics and inventor of the “invisible hand.” It’s perhaps more surprising when two German economists crop up in the footnotes with a paper entitled “Corporate Power and the Self-Destruction of Neoliberalism,” which doesn’t sound like standard Republican fare.
Mariana Mazzucato, a U.K. professor who’s collaborated with progressive Democratic congresswoman Alexandria Ocasio-Cortez, gets several mentions. Mazzucato has published two books making the case that the importance of state-driven investment has been systematically downplayed by mainstream economists.
Rubio’s report suggests that America’s main competitor has a better handle on that idea.
“China has a whole-of-nation effort underway to dominate innovation and high-value manufacturing,” the report says. “In the U.S., we have outsourced these decisions so fully to mere market preference that we have made it easy to deny that a decision must be made at all.”
America’s widening budget gap, the focus of Republican mobilization against MMT in Congress, only gets a passing mention in Rubio’s report. He’s more worried about the deficit in business investment -- and what it says about the state of U.S. capitalism.
“Something is wrong with the institutional arrangement of the American economy if that is not happening,” he concludes.
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