California has plenty of water

I was driving through the Central Valley recently and saw an orchard of uprooted trees. I don't know what they were, but I assume that they'd been dug up because the farmer didn't want to irrigate them any more.

A pity. But California still grows rice.

Which is why I say California has plenty of water, it just does not use it particularly well. Since farmers do not pay for water in a metered way, or at market prices, they waste it. And since ground water is not regulated, they waste that too. Instead, we have a series of hairshirt awareness raising measures that do little to address the real, long term water needs of this area, and may actively hurt by crowding out such considerations with theater.

Some good references in this MR post.

Why MMT is still important

Mosler refers to individuals who understand MMT as being "in paradigm", which those who do not as "out of paradigm". I've had pushback from JKH about the term "paradigm" when talking about this, which is fine, but I think this post from Sankowski on China and consumer demand, who I would consider someone to understands this stuff, illustrates just how, well, paradigmatic the whole thing remains.

The issue is China switching from a production economy to a consumer one:

“China is changing from a producer model to a consumer model,” said Stephen Roach, a senior fellow at Yale University in New Haven, Connecticut, and former chairman of Morgan Stanley Asia. “That’s an enormous opportunity for the U.S.”

Surging Chinese exports blew a big hole in the U.S. labor market over the last quarter-century, all but wiping out some industries. As many as 2.4 million American jobs were lost from 1999 to 2011 as a result, according to calculations by David Autor, a professor at the Massachusetts Institute of Technology in Cambridge, and his fellow authors in a paper last year.

Sakowski adds:

“The bleeding has stopped” China is really the only economy large enough to do significant damage to the US at this point.

So who is next? Which countries can disrupt the U.S. economy with both low wages AND the the supply chain which supports those low wages.

But this whole notion of exporting countries, such as China, damaging labor markets in the US is completely out-of-paradigm. The MMT argument goes, that if China wants to trade real goods and services for US$, then the US Gov needs to run higher deficits to satisfy the Chinese demand for US$ while maintaining full employment at domestically. Any domestic labor market weakness is due to insufficient spending (as always) and not actions by the exporter. The terms of trade, in this case, are firmly in favor of the importer as deficit spending is easy, while the exporter needs to forgo the real output of their labor.


I think this highlights just how much of a mental shift you need to really look at fiat currency as what is it, instead of the various barbarous relics that continue to cloud our thinking.