Scott Fullwiler clarifies his position
At any rate, let me just say that I agree with your [Cullen Roche] post here–MMT is a “big tent” and there can be different policy views that are consistent with the MMT understanding of how the world works.
And I haven’t yet encountered a policy proposal of yours that I have significant disagreement with–I just want to add a JG to them because I think it would be a net gain, and you don’t.
That’s fine for now–we can work on seeing how far we can take that. Perhaps we’ll never agree on that point, but we do agree on 90-95% or more and we (or I) shouldn’t under emphasize that.
You’ve also done as much as anyone to promote MMT in the blogosphere; your concerns/views are always important and legitimate in my view, even in the rare instance that I disagree with them.
Pragmatic Capitalist
12 comments:
I don't know what all this fuss over the J.G is about......
Shaun,
Some persons otherwise knowledgeable in MMT are desiring to ignore the part of MMT that requires the concept of an employment "buffer" policy where the govt sets the unit price of a "stock" in the "buffer" that will act as a price "anchor" and facilitate a greater degree of "price stability" within the economy while providing full employment vs the current chaos....
Some folks in/around the work of MMT advocacy are veering off track and advocating continuing portions of the current chaos and the resulting human toll.
So of course the non-contemptible people in/around MMT advocacy have a problem with this.
Resp,
Silly!!! I will pray that they do not fall for the temptations of the dark-side.
Politics. Do they have an alternative policy or are they stuck on the nairu? IMO, we already pay people to be unemployed so whats the difference besides added productivity?
Rodney, research shows that there are huge costs associated with idling human resources. Bill Mitchell, especially, and other MMT economists have written pretty extensively about this.
This is a great comment. Scott is a good guy and really gets it.
Matt,
I disagree with your classification of me as someone who wants to see the status quo remain in force, or that I enjoy human misery.
I don't advocate increased human misery at all - even a cursory reading of my work will show I am fully against forcing actual people to lose their jobs and in many cases their families due to misguided policy.
Workfare is preferable to what we have now, but it's not part of the operational description of the money creation process.
Workfare - or the JG as MMT people like to call it - is a fantastic idea. It's a more humane price anchor.
But that doesn't mean we should use an all or nothing approach. If we got widespread recognition of the salient fact - government budgets don't really matter - the world would be a better place, even without workfare.
And the world would be a better place with workfare and no recognition of core MMT.
Just from a man on the street point of view, it seems to decay in to political preferences and theory rather quickly.
TC,
If you are advocating jettisoning the "JG" it is continuing part of the status quo....
We dont have a "buffer of unemployed". That is an oxymoron.
I have to disagree (perhaps it is splitting hairs) with a characterization of the current system as a "buffer of unemployed", rather it looks like we have "no buffer".
It looks like you cannot run a FFNC without a buffer of some sort with the govt currency monopolist setting some sort of foundational price of a "stock" that ends up in a "buffer"... currently, with no buffer, it logically results in a failure mode... not a "buffer of unemployed".
If you have no "buffer", looks like you are by default applying a $0 value to whatever the critical stock in your economy is (looks like for the domestic economy, this is labor).
Ironically, the monopolist OPEC is setting their external price for oil in USD and our govt is ratifying that price... while our moron monopolists here in the domestic US are DOING NOTHING, not setting any price... the result is chaos/system failure.
Resp,
The JG is "core MMT" for the MMT economists, since the see MMT as a macro theory that advances the traditional debate beyond New Classicalism/Monetarism, New Keynesian/Monetarism, and even Post Keynesianism/Demand Economics by reconciling production, employment, and price stability, previously thought to be irreconcilable.
The way these folks see it this is academia talking to each other in terms of an ongoing debate. Non-economists are not going to see this is the light they do because they are not coming from the same place.
MMT as a macro theory is based on the MMT view of monetary economics, which many think of as "core MMT" and the macro theory as peripheral. That is not how economists see it.
The monetary description can be separated from MMT as a macro theory. No problem. And it can be used in a lot of ways other than macro, or a non-MMT macro theory can be built on it, too.
But "MMT" has a pretty specific meaning as used by the developers and that is with reference to an advance in macroeconomics that they view are nothing short of revolutionary since it claims to resolve long debated issues concerning the big three: production, employment and price stability.
What the MMT economists seem to be saying now is that if one wishes to call the monetary economics "MMT," too, that's OK with them.
I personally think it is hugely confusing to have two separate ideas designated by the same label, and no good will come of it other than smoothing some ruffled feathers now.
Seems to me that leading with a JG puts the cart before the horse. Let's say the Humphrey-Hawkins bill were updated to provide Employer of Last Resort jobs, does anyone doubt it would be set up to be revenue neutral?
Any fiscal loosening provided by ELR jobs would be offset by tax hikes (or spending cuts). Granted the economy would benefit from the income redistribution, but it'd be far easier (politically and operationally) to simply use the new tax revenue to fund a larger payroll tax holiday or to expand Medicare eligibility.
So the first step is to kill pay-go ("pay as you go") budgeting-- the easiest way to do this is by moving the goal posts; put coin seigniorage on-budget.
The updated Humphrey-Hawkins bill mentioned above is no hypothetical. Last year, John Conyers sponsored the "Humphrey-Hawkins 21st Century Full Employment and Training Act". It would create a weak tea JG (most unemployed workers would have to wait 6 months to be eligible) and was, naturally, set up to be revenue neutral.
"Financing the Trust Fund- Subject to the availability of appropriations for this purpose, the Secretary of the Treasury shall annually make available to the Secretary of Labor for deposit into the Trust Fund an amount equal to the amount collected for that year through the tax described in section 4475 of the Internal Revenue Code of 1986, as added by section 7."
http://www.opencongress.org/bill/112-h870/text
Oh one other thing, this clause in Conyers's bill just made me shake my head...
"Subject to the availability of appropriations for this purpose..."
OK, by separating Authorization from Appropriation that means even WITH the new tax revenue coming in, its up to the House and Senate Appropriations committee to decide every year whether to fund the ELR bill. Since the new tax revenue is reducing the deficit in any event, the Appropriators will almost certainly use the money to fund (at least in pay-go terms) whatever catches their fancy-- those new $15 billion Ford-class carriers come to mind.
The smarter play would be to set it up as an entitlement program with an automatic permanent appropriation and make "paying for it" someone else's problem. The federal student loan program has a "blank check" appropriation clause that is a work of art and should be copied in any bill creating a JG, Medicare for All, universal Head Start, etc.
there is authorized to be appropriated, and there are appropriated, out of any money in the Treasury not otherwise appropriated, such sums as may be necessary for the purpose of carrying out section 1072 (c)(7) of this title.
http://www.law.cornell.edu/uscode/usc_sec_20_00001071----000-.html
Beowulf, I don't that that the fact that "core MMT" as a macro theory requires advancing the JG as an initial policy option. Policy options are not only economic but also political and have to take political conditions into account. I would that the practical way to proceed is by advancing the MMT policy options that have the greatest likelihood of surviving the sausage-making process.
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