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Well today, I'm speaking with Dr Phil Lawn, who is Australia's leading Ecological Economist and he teaches occasionally at the University of Adelaide. And Phil, thanks for joining us.

(No worries. Thanks Bill. Thanks for inviting me.)

Yeah. And the students have so far in this in the three weeks of the course have learnt a lot about MMT and the financial situation of governments and the role of taxes in a system where the government isn't financially constrained.

And we've also talked a bit about climate change and the relevance of MMT to climate change.

So what have you - what can you tell us about your work and how MMT fits into that big issue of ecological challenges, etc?

OK well, I think Modern Monetary Theory is a key to a green transition. It's as simple as that. And I think in relation to a green transition, there are 2 aspects to focus on. There is the demand side and the supply side.

Governments, as you just mentioned, need currency-issuing central governments need to tax the non-government sector. Of course, not to finance their spending, but to make room - resource room so that they can spend together with the non-government sector in a way that's not inflationary. Well, if a government has to tax the non-government sector, then it can think creatively about how it can tax the non-government sector.

Of course, one important way to tax the non-government sector is to tax it in such a way as to redistribute income.

So the equity of the distribution of income is important.

But from an environmental point of view, and to help the process, the green transition process, it's important that governments tax things that have an undesirable impact upon the natural environment.

And of course, we're talking about things like resource depletion, pollution and greenhouse gas emissions. So governments can impose taxes in a way that can alter people's consumption behaviour so that they can move their consumption patterns away from resource-intensive, pollution-intensive, greenhouse gas-intensive goods and services towards those that have lower impact.

So that's an important thing about taxation, which MMT can play a role in in encouraging and promoting.

But of course, it's one thing to alter people's consumption behaviour and demand patterns.

What needs - what is being the change in the demand, of course, needs to be supplied.

And if we're talking about a green transition, a lot of the goods and the infrastructure that will be required to meet those changing demand patterns.

We'll be talking about infrastructure. And we're not just talking about individual goods and services that you might have in your household. We're talking about infrastructure. And one of the things about infrastructure is that it tends to have public goods characteristics.

And I won't go into any great detail as to what public goods are. I'll just point out that a lot of people do think that because traditionally governments provide public goods, that's the reason why they call public goods. It's not the reason why they're called public goods. It's the characteristic features of the goods that makes them public goods.

Now, I won't go into any great detail as to what public goods are, but even mainstream Economics recognises that it's very difficult if you're supplying public goods to supply them profitably. It's very difficult to earn the revenue necessary to make profits.

Well, the private sector could still provide public goods but they'd make losses and the private sector can't sustain losses.

So if we need this infrastructure, this change in infrastructure to meet this changing demand to help with this green transition, then governments have to step in to provide this infrastructure in the same way they probably stepped in after World War II and built the roads, the hospitals and schools and so forth. Now, they still need to do those sorts of things but we need to retrofit the global economy and national economies so that the infrastructure, as I said before, is low resource-intensive, low pollution-intensive, low greenhouse gas-intensive.

And of course, governments can do that. But the currency-issuing central governments can do that. They dont have the financing constraints so they can always access the resources, the real resources, assuming they're available, to build and provide this infrastructure.

So that's a key thing about Modern Monetary Theory that standard Economics doesn't understand. Because the standard Economics approach would be that OK, governments have to provide this infrastructure.

They're going to have to raise the revenue through taxation. And if they can't do that or don't want to do that, then we're going to have to sacrifice something else. We don't need to sacrifice something else unless, of course, resources are fully employed beforehand, but they're not.

There are a lot of resources available for central governments to acquire to retrofit the economy.

And the capacity to finance that transition is no problem for a currency-issuing central government.

So that's basically in a nutshell - what I would say is the key role and contribution that MMT can play towards the green transition - it's very important.

It's all well and good for Environmentalists and Ecological Economists, being an Ecological Economist myself to say, we need to do XYZ but of course, the question that's always raised is how is the central government going to pay for it? Well, that's not a problem at all. MMT increases, opens up this policy space for the green transition to go ahead and proceed.

There's nothing from a financial perspective that stands in our way. It's only real resources that matter.

It may well be that if in undertaking the green transition that we find that there is a shortage of resources, well, then it might become a political decision - not an economic decision. Perhaps people will have to forego their 3rd, 4th, 5th flat screen television set or what have you to undertake a green transition.

But that would be a small price to pay if people do have to be taxed a little bit more. So to free up some of the resources that used to make an extra flat screen TV to provide the infrastructure that's required for the green transition.

I would summarise it in that way.

OK, that's great and thanks very much for your insights - been really, really good.

Thanks Bill for the opportunity. (Bye) Bye.

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