Notes, you can purchase. Tonights books by clicking on the green button below the speakers and we encourage everyone to do that to support our authors and also politics and prose. Tonight were going to encourage you to ask questions which many have. The back portion of our event will be dedicated to your questions as you click on the ask a question with the bond you can see where people have asked questions and you can vote most interested in hearingour authors answer. Lastly just a reminder that you can see us but we cannot see you so feel free to relax and get comfortable. So without further ado, it is my honor to welcome Stephanie Kelton, professor of economics and Public Policy at new york at stony brook. Shes here to discuss her new book the deficit myth. Tonight we are also luckyto be joined by Zachary Carter who is Senior Reporter at the Huffington Post andcovers congress, the white house and Economic Policy. Tonight he will be discussing his book the price of peace. Without any further ado here are zachary andstephanie. Hi everybody, nice to be with you. I want to start by talking to stephanie about her book which is called the deficit myth and stephanie all i hear about when i listen to economic commentary is this talk about debt and deficits. There was a tweet from the lincoln project, this group of antitrump republicans talking about how trump had run up 17. 8 dollars of National Debt. Their writing to the washington journal and New York Times about debt but your book called the deficit a myth. What do you mean by the deficit myth and why do you feel this book wasimportant to write at this point in time . Thank you and thanks to politics and prose for having both of us here talking about our new project. Its a pleasure to be with you. First let me start by increasing the deficit and adding to the National Debt is probably the least bad thing donald trump has done. We should just get outthere. I understand that we are inundated from the media, mainstream press, politicians , everybody talks about deficits and debt, virtually everybody talks about in an native way. When we hear people bring up the deficit is almost always the case that they are there to complain about things or the National Debt. These are presented to us as problems at a minimum and as a National Security threat or a threat to future generations. In real danger to us individually, your share of the National Debt, borrowing from china, all these things that create a lot of anxiety on the part of the American People so when you say why did you write this book i think that my hope is that i can reducethe level of anxiety. I start in chapter 1 of the book telling a story about being a child and watching the Television Show sesame street and sesame street was good at teaching us to separate things into categories. These things are similar. These things are unlike the rest of them. And as a kid my sister and i would watch and play along as the images came on the screen and they put out a bicycle and an automobile and a train and a 10 issue and say one of these things is not like the other. We would holler back at the television the issue is not like the others. So in the book i say that im an adult now but im still calling back to television all the time because i turn on the tv and i hear often socalled experts on economics to talking about the deficit for the debt in ways that i think are fundamentally wrong and they are getting some big things wrong and im hollering back at the tv so the reason i wrote the book i think is to get us to a better place, to a better understanding where we can have a more meaningful and fruitful discussion about deficits and the National Debt and government finances that ultimately i hope will get us to a place where we make better Public Policy. A common criticism you hear from people who talk about modern monetary theory or Stephanie Kelton is that you believe deficits dont matter. There was a nasty review in thewall street journal where somebody accused you of this. Do you think that deficits dont matter and what do you make of this critique . Its funny because if you go to the webpage that i created to talk about the book it literally reads dick cheney says deficits, reagan proveddeficits dont matter. He was wrong. There i am saying i disagree with cheneys characterization that deficits dont matter. My argument in the book and throughout my work is that deficits matter but not the way in which weve been taught to believe that they matter. So weve been taught as i said earlier that they are inherently dangerous. Undesirable. That theres something you do in times of crisis because you have no choice like now but that in more normal times deficits are something we ought to be avoiding. Governments should not spend more than they taken in the form of taxes. They should strive to balance budgets and avoid increasing the debt. So i walked through in the book a variety of ways in which deficits matter and one important way is every deficit is good for someone. When you see the republicans having these huge tax cuts at the end of 2017, these were massive tax cuts that republicans passed knowing they would massively increase deficits so if republicans believe that deficits were inherentlydangerous and they were going to wreak havoc and all these bad things were going to happen. They wouldnt do that. The reality is the republicans understand i think perfectly well that every deficit is good for someone so what they did was to massively cut taxes on corporations and the wealthiest people in this country, 83 percent of the benefits went to people in the top one percent of the Income Distribution and those who needed to help but the deficits the government ran and are running become financial surpluses in somebody elses pocket. There deficits become our surpluses. They are red ink is our black tank, the question is whos benefiting from that financial windfall. Republicans are happy to run deficits because they know they create a financial surplus that they can direct into the hands of the people that they are most interested in helping and what i would hope is that democrats would reach the point where they to understand that deficits are something we should be striving to wrestle down and reduce but that the deficits can be used as a tool to carry out an agenda that serves the broaderpublic. That benefits people who are truly hurting. So thats a lot of what i talk about in the book. It feels weird when i read the book whether its in the blog or oped youvewritten over the years. There is a real emphasis on economic distribution whether its the distribution of resources. How you move supply chains to point a to point b or what kind of society you want to live in in terms of economic inequality so the focus seems to be on a sort of social vision more so than, i dont want to say youre not an economist but the way the traditional economists focus on debt and deficit as the primary way of understanding the economy, you seem to have in my mind a broader social vision. First of all is that an accurate description of the way you think about your work and second, what do you think it says about the economics profession that we have this focus on debt and deficits instead of these other social priorities . In the book chapter 7 is called the deficits that matter. So thats what im trying to do is redirect our obsession with deficits to the very real deficits that surround us in our everyday life and that are crushing in many ways for millions of people inthis country. So you are right that for me i look at the federal budget as a moral document and in the federal government there are elected officials and they get to write and pass the budget that determines where Financial Resources will be dedicated and to what end and in my view anyway our elected officials are there to act in the interest of the broad majority of the people of this country. And if the people of this country indicate that they want everybody to have healthcare for example, then i think congress should be looking for ways to budget our nations real resources so we can deliver thatmaterial wellbeing to people. So its about saying the easiest part of any agenda is finding the money. Thats the easiest part. The challenge is how many of our nations real productive resources, howmany workers, how many people , how much of our factories, how much real resources do we want directed to producing public goods, healthcare, education, infrastructure. Those sorts of things and how much do we want to leave to the private sector sothere is a balance there. When i talk about addressing the deficits that matter whether its climate or higher insecurity or education, student loan debt, healthcare, all that is in the chapter i talk about. Im focusing in ways that may be do not comment about economists to think about directing real resources to solve real problems in our economy. Id have to say that focus reminds me a bit of a fellow i spent a lot of timestudying. His name was John Maynard Keynes, are you familiar with his work . And i familiar with his work. I dont know. It rings a bell. That guy . That guy, a famous political cartoon on that mug of keynes looking like a spiderin a chair , frankly. Its very lengthy. One of the things i love about studying keynes ishes one of these kind of broad thinkers. Hes kind of an economist by activist. I feel like his life is one where hes constantly surrounded by all these philosophers and artists and great writers like for daniel wolf and em forster and all the merchant ivory sweeping melodrama from the 80s and 90s. He would go get early drafts before they came out and he of course would be like dont tell anybody but let me know what you think maynard and he was concerned with art and this big grand vision of society but because he realized economics was the science that he could pursue that would give his ideas access to power. And i feel like when i read his work his tougher economic work like the general theory is dense and kind of like like eating a pretzel covered in corn. Its very nasty at times but a lot ofhis other books , his essays, his letters its very clear he has the ability to distill the big complex ideas into fragments that ordinary people can understand because i think hes fundamentally concerned with ordinary people and what they can understand because he believes the economy is not this weird thing that have to be it off away from social policy. He believes its a way to address the social policy cares about. Is concerned with war and peace and democracy and all the problems of the early 20th century. And when i read that stuff i have to say i feel like the economics profession today doesnt seem to be working at the same level of ambition for the most part. There are exceptions clearly and there are a lot of good economists out there but the idea that you would sit down with, i feel like economists are there to tell us know, that we cant do the things that we want to do. Cant solve the problems we need to solve. So my question for you stephanie is what are the big problems that economists need to solve today if its not debt and deficits . What should the great minds from academia be focusing their attention on its not debt and deficits . I think in the moment it seems to me that the obvious answer is unemployment. And this is of course the big problem that came to wrestle with in the general theory because the economy was in the gripsof the great depression. So here we find ourselves again with tens of millions of people who have lost jobs in the course of the shortest span of this magnitude of job losses in our nations history so weve got to figure that out. I think that probably right now theres no higher calling and to deal with unemployment you know this. You and i know a lot of these people. There are economists all over the country. You and i might agree that there arent enough there are economists that are also engaging in the climate space , not necessarily as experts on Climate Science but there are environmental economists working in collaboration. They mentioned keynes working alongside philosophers and people with areas of expertise outside his own those collaborativeefforts are important. When it comes to healthcare or education there are things economists can do and ways in which we can be useful but we i think need to sometimes show some humility and recognize that scholars in other fields bring a lot to the table and to the extent that we can work Better Together and i think economists are sometimes not good at this. We think our disciplines sit higher in the pyramid, in the hierarchy that a lot of other disciplines. And so unemployment, health care, the environment, those are problems as i said i did a chapter in the book on this but i want to talk about your book. Lets talk. I want you to share with all these wonderful people who are here what made you want to study this man who i think is a fascinating figure but what was it about him that made you want to study and study years i presume that he and his life. I didnt come at keynes from an economics background. I have a masters and i studied philosophy and undergraduate but in 2006 the job i fell into after from college was a job in the financial journalist and i was sitting in Central Virginia working for a trade publication as part of s p global but i wasnt terribly thrilled to be covering backing as a 22yearold, it just didnt seem like the most exciting job in the world but then the Banking Sector did me a huge favor and exploded. And it became very exciting to cover the bankingsector. And there was this very clear shift that happened over the course of 2007 and 2008 where everybody who i talk to in the markets was like we all agree the markets are rational. We agree that supply and the mind, they will find a prosperous equilibrium and we know that things are going to work out if the government stays out of the way and then there very quickly said obviously the government needs to intervene immediately to rescue the Financial Sector otherwise the economy is going to collapse and society is going to fall into disrepair and when that shift happened, people were very open with me , at least Financial Market participants were open about the fact that they were changing their minds, i dont want to accuse these people of hypocrisy but all of a sudden they were talking about this guy John Maynard Keynes and saying his ideas were relevant and they were key in a way where previously he had been sort of dismissed through academic margins, if you were a kenyan specialist, i guess paul krugman had a job at theNew York Times but academically it wasnt taken seriously. You have to work for a particularly specialist keynesian institution and in the markets people didnt really talk about it like it was areal thing. Suddenly it was totally legitimate. And i thought that was incredible. I thought that shift was remarkable not only because people had changed their tune but because the possibilities that were available in terms of policymaking seemed incredibly broad and the specific policies that we pursued in 2008 where we basically bailed out the Financial Sector and let everyone else twist in the wind, that struck me as not terribly a great way to go about rescuing an economy. It struck me as odd fellow who was a sadist would prescribe Something Like that so i tried to read the general theory and like i said, the general theory is that thisis a nasty piece of work. If you want to give yourself a big headache go open the general theory and start on page 1 and try to get through it. Its a brilliant book, is one of the great triumphs of western letters but its like reading nietzsche or heidegger where you have to slog through dozens of pages of nasty crazy concepts until you get to that one jim very suddenly. The seas part and the skies open and youre like this mans genius but i went and read consequence of the peace which is his piece on the treaty of verse either ends world war i this is a much clearer document. Its easier to understand. Economically its not as sophisticated as what makes him famous i think today as an economist but the moral and philosophical force of the document and the political ideas involve i think are just as urgent as everything in the general theory and as really any piece of political writing i ever encountered and that book just lit a fire under me. This guy is onto something serious. Its about about political accountability and he says essentially the leaders who have organized this peace treaty settled every country with insurmountable debt whether its the war debt for theallies , that theyve assumed over the course of the war or the reparations that has been assessed on germany. That lost world war i obviously and as a result people are going to be shipping money across different borders and theyre not going to have the Funds Available to mobilize those resources that are going to make their economies recover and generate prosperity. And the really i think brilliant point is thats not just going to be an economic problem. People are going to blame outsiders for the fact that theyre not recovering and theyre not going to be totally wrong because it will be shipping capital abroad could be spent at home. And thats going to fuel international resentment and going to lead to dictatorship and war and i thought connection between economic dysfunction and social crisis was something that i just had not, i felt this sense of unfairness over the bailouts in 2008. I didnt feel like there were economists who were putting it together saying the reason these numbers appear to add up on paper but actually result in socially terrible results, that didnt feel like it was something that was coming down from on high from people whether republicans or democrats in positions of economic expertise and keynes in his work i felt like this deep moral force and also this concern for the things that were not really about dollars and cents but he was concerned about the equations that he was really afraid of dictatorship and w