Wednesday, July 15, 2015

Time to ask ourselves, why hasn't MMT caught on?


I am drawn to write this because of a comment I made on an earlier  post that started me thinking about MMT and its lack of broad acceptance.

Bill Mitchell, whom I have great respect for and who is an awesome writer and fierce proponent of MMT, writes in his blog today:

"...demonstrates a palpable failure to comprehend what the real issues confronting the Eurozone are and how Eurozone Member States (19 of them) are fundamentally different in terms of fiscal capacity relative to nations that issue their own currency."

Mitchell's an extremely smart guy, but he seems to suggest that Germany's leaders (and elsewhere in the ruling class of Europe) don't understand the difference between the whole currency issuing and non-currency issuing thing. Basically it's a statement that they're all stupid.

Now let me just fully disclose that I have been of this view for a long time and I have written, here, numerous times about my run-ins with people like David Stockman who totally contradict themselves left and right when they spout their nonsense. I have argued that this had to be a sign of stupidity because a really clever yet manipulative person who knew the truth, but was intent on spewing propaganda would have his/her story worked out in a way so as not to look self-contradictory. In other words, so as not to look stupid.

Furthmermroe, over the years of publishing this blog I have receieved dozens of emails from readers telling me that they used to think the way the mainstream thought, but thanks to MMT and a little reflection they have had an epiphany and now see, clearly, how the prevailing "wisdom" is all wrong. Furthermore, most of these folks had no formal training in economics, which is proof that people can shed false dogma's if they wish. I know I certainly did.

Matt Franko and I have spoken about this, too, where we have  pretty much agreed that it was stupidity that causes these folks to stay with their dogma despite mountains of evidence and proof that they are wrong (think: Reinhart and Rogoff fiasco) or, simply by looking at the ongoing failure of their policies and theories.

In the past I'd argue with Warren Mosler about this. Mosler would insist that many in the economic mainstream really knew the truth, but for whatever reason (and he offered no explanation) they would continue spewing their nonsense. I used to tell Mosler that he was naive and crazy to beleive that, but now I am beginning to think that Mosler was right. This has led me to see why, after 20+ years, MMT has gone nowhere and it won't go anywhere.

The powers that be have absolutely no reason to embrace MMT and change the way the game is being played. What for? The wealth and power that they are accumulating, which I am sure is beyond their wildest dreams, is reason enough to stay with the status quo even if the underlying concepts are "wrong." (Wrong for whom?)

Seriously, what reason do they have to change over to a system that would be more fair and equitable to everybody else when it does absolutely nothing for them? It's like Hillary Clinton saying she wants corporations to "share" more of their profits or, Paul Tudor Jones thinking there's a "free market" answer to inequality. The system has avarice and inequality built into its very nature and it was made that way not by kindness and gentle cajoling, but by brute force. To take it away requires brute force as well, but that ain't gonna happen. It simply cannot be wrested away and certainly not by a bunch of professorly dissertations or blog posts. Those in power don't give a shit about blog posts unless it suits their interests.

Look at Bernie Sanders. He may not be full blown MMT, but he's close and he has Stephanie Kelton working with him. Sanders is attracting huge crowds wherever he goes because regular people--Democrats and Republicans--love his message, but what chance does he have of winning? The powers that be will crush him when it comes to fund raising and they will be able to drown out or twist and poison his message and I'm sure he knows  that.

Furthermore even if Sanders was elected president how would he get his policies passed? He'd certainly be facing a Congress where most members were put there by the elites for the very reason of thwarting him. Sanders thinks it's a matter of more people voting, but I think he's naive on that  point. Over 60 million people voted for "change" when they voted for Obama and look what happened: more of the same.

Granted, Sanders would not be another Obama as he has plainly stated and I totally believe him on that point, however, this groundswell of grassroots support that he says is necessary to really affect change is not likely to happen because endless amounts of money would be spent to keep people voting against their own interests.

Even now you are starting to see many left-leaning pundits and some notable Democrats working hard to marginalize Sanders. Some might be tempted to say they are cannibalizing their own, but that would be incorrect. They just don't want to rock the system where they, too, have a place. Maybe not the top place, but a place nonetheless.

Perhaps I'm being too pessimistic. If I am, please, tell me why. Tell me where I am wrong. Tell me where I am making a mistake and all we need is more time and patience and enough people voting. Personally, I just don't see it.

If it's jungle  out there with a bunch of predators running around then we have to become one of the predators and not the prey. We need to get into the ruling class etiher by buying into it or riding its ideological coattails. I'm pretty sure that all of you who read this blog won't be able to stomach the latter. So that leaves only option #1. Let's roll!

54 comments:

Neil Wilson said...

It hasn't caught on because the funding layer hasn't been sold the concept yet.

As I've said before you need to find some nearly rich people and promise them that they'll be very rich because your policies will shut down the currently very rich and make space for them.

They will then fund the political programme.

Which is why 'soak the rich' ideas are always going to be stillborn.

Or we take so much money off then on the FX exchanges that we can fund the programme ourselves ;-)

Unknown said...

Mike,
Thanks for writing this. Regarding the Eurozone, I am of the opinion, that just like in the serial The Prisoner everybody finds themselves a prisoner of the rules drafted for the EuroZone under the Maastricht Treaty. THe Maastricht treaty was contentious and very difficult to pass.

It is my opinion, that everybody including Germany regards the rules as being inadequate and inappropriate for the purpose. There is no way that austerity can be avoided under the current rules. The rules cannot be changed without having "Maastricht II"

Under current rules, two countries Ireland and Spain have managed to eke out some growth, though much of their population continues to suffer. There is no working example of a country leaving the EZ and recovering better than the above two. We the people who understand Modern Money, say that a Keynesian approach should get countries out the current messes faster. This is what MMT, and all its proponents including Bill Mitchell and Mosler and of course you have been saying.

In this light, Schauble's comments to Varoufakis about the Grexit have special significance. Supposedly he has said to Varoufakis "How much money do you want for a Grexit?" I believe that because of the contentiousness of the negotiations as well Varoufakis' desire to stay with the Euro led him to a misunderstanding of what I believe that Schauble was suggesting.

I could of course be incorrect, but I believe that I could expand out Schauble's statement as follows:

"We find ourselves prisoners and victims of the same system. Perhaps by the leaving the EuroZone, you might be able to adopt Keynesian policies that would be able to get you out of the current depression. These policies cannot be adopted under the current rules. So what resources would you need from Europe to make a successful go at it"

I believe that an unsaid part of this would also be "If you can make a success out of a Grexit, then perhaps it would be easier to have a 'Maastricht II' and to be able to change the rules."

My feeling is that the waterboarding of Tsipras was an effort to push him to taking the Grexit option. But unfortunately, that way was not chosen.

Unknown said...

Obfuscation, misdirection, propaganda, deception, disinformation, misinformation, consensus reality... it's all - ALL of it! - a big con game.

Power and wealth gaps can only be built (and maintained) on ignorance — either willful or impinged.

Mainstream economics is a psyop, plain and simple. We're involved in (financial) warfare, after all...

Practical men have always used psychological trickery. It has always been like that, and it probably always will.
----
(Insert name here)'s inability to admit this is very, very suspicious. Of course the "shortcomings" of mainstream economics are deliberate; of course the people who benefit from it are going to defend it as if their lives depended on it (and their lives DO depend on it!). It has been a constant in history: those who are able to do so will form a priesthood to defend the dogma over which their power and wealth differentials rest on.

The amount of intelligence operatives, shills and payed liars in so-called economic circles is staggering. Of course it is: power and wealth are inextricably dependent on the maintenance of such untruths. It is too important a subject to be left to economists.

How can it be otherwise? Economics (the "science") is, at this civilizational juncture, the "master" science, the "supreme" form of "rationality". It is by far the most useful intellectual instrument of war. As such, everyone that has an interest in power acquisition, maintenance and expansion cares deeply about Economics.

Ignacio said...

MMT only is applied when on national emergencies or for military spending by "democratic" governments. Autocratic regimes like China can apply MMT because people cannot have a vote on what money is created for, and the process is completely controlled top-down. There is an inherited thought from the Enlightenment: "for the people, without the people", as it was (and current system still is) an elitist project. Basically, people in power are control freaks who want to maintain some sort of bargaining power over their population.

There is more to it ofc:
1) The first myth is inflation, and there is an old saying about democracy, printing money and inflation... This will be the first knee-jerk reaction to any sort of mention to "monetary financing".
2) Bargaining power over labour. If the government could set labour market floor price (though the use of MMT and things like JG, BIG, more public sector jobs or whatever) it would be a complete disaster for the capitalist class. Remember that capitalists are anti-(real)-free-market and pro-business. Competition is bad news for capitalists, and someone who has more power than you setting prices is certainly very bad news (although this happens in most goods and markets, except ofc, labour).
3) Malthusianism. If we are in a world were resources are scarce and we have to provide to ourself, in a zero-sum world, we want to keep as much share of the cake as possible, not give to the people through MMT.
3) Moral-hazard/moralizing economics/ordo-liberalism. A load of garbage used as an excuse (except to practice lemon socialism) to hide the real motives over those ideological positions.

Brian Romanchuk said...

I think you need to split the theoretical side from the political side.

1) With regards to theory, mainstream macro is entrenched within academia, and the field will at most advance "one funeral at a time". The key driver of prestige in theory is acceptance by central banks, and central banks have no interest in adopting MMT - what does it give them?

Also, the American mainstream thinks differently than the European. On the subject of currency pegs, MMT is in the same camp as the "neoliberal" American mainstream.

(2) I generally stay out of political discussions. I do not tell foreigners how to vote, and I do not want foreigners to tell me how to vote. Additionally, I approach politics from the point of view of a Canadian prairie populist. This is a political style that has no correspondence to any foreign political group I am aware of. However, I am unaware of any such populists still being around in Canada outside of old folks' homes. (I live in Eastern Canada now.)

In my view, the MMT Job Guarantee programme could be put in place by a prairie populist style movement. These movements targeted specific reforms, won, and went home. This is a completely foreign concept to other political movements, which are basically trapped in tribal political games. In my view, it is unsurprising that they fail.

Michael Norman said...

Neil,

I thought it was funding for a long time, too, and enough funding could definitely push it a lot farther. However, it gets back to my point: why would rich people fund this? They're already rich. It does nothing for them. The don't need full employment or job guarantees.

Ryan Harris said...
This comment has been removed by the author.
Footsoldier said...

I've been thinking about this for at least 6 months.

I don't think they are stupid. I think they know exactly what they are doing. These are very clever people. More importantly I think what they do is intrinsically linked to American imperialism.

You just have to look at how it emerged after the fall of the Berlin wall. Harvard and MIT and the school of Chicago were funded by billions to come up with a global asset stripping machine. New York was the blue print on a local level then it was rolled out to Chile on a national level and what we see now is the global level.

Michael Hudson has come very close to nailing it. In the way he desribes how they have the set the current system up to nuturalise central banks and let commercial banks take its place.

The brighest minds of each country are then sent to these universities and brainwashed and take back what they have learned which only furthers American imperialism abroad. Making it easier for America to achieve their political goals without a shot being fired.

Warren mosler always states quite clearly that most bankers knows how it really works MMT in reality. This is just another clear signal that Washington knows how it really works but them proceed to fool the public on the reality of it all. So they can set it up to asset strip for the one percent.

For me, because Parliaments all around the world and institutions like the bank of settlements, the UN, The world bank, the IMF and all of the media has been hijacked by the very rich in each country. This has gone way beyond a simple battle of ideas.

They just choose who they listen to and fund them for billions. They don't care if the blogshpere are calling them stupid. The system is in place and all of the barriers have been dismantled which means nobody will stop them.

War is the only way things will change now in my view and that will be East v West and the winner of that war will either carry on as normal or forced to change. Academics are not being listened to they are irrelevant.

The only other option is MMT groups need to start acting like trade deals in the way Wray is with Italy and Spain. When any country is attacked MMT should be sending teams of people there to help out - offering their services. When nations are attacked they are more likely to listen.

We should have been organised and ready for Greece for example. That should be a lesson for us. We know there will be many more and South America has to be a breeding ground for MMT. In short we need to be ready take over a countries finances on their say so. To show them and the world the truth.

Blogging won't solve that we need a team of MMT navy seals that's ready when required.

The Brics meeting is another example where we have missed out and the Scottish referendum when countries don't want to be part of American Imperialism. We should be in there baning on doors until we are heard. We should be on the phone to Putin every hour until we get his attention.

Of course the same problem then arises the elite of each country will be out to stop us but this is where this will be won or lost. Not in universities or the blogsphere, On the ground in the trenches on the battlefield of countries that are being attacked by wall street. We need to be ready to enter that arena and prepared to run a country for the victims if asked.


Otherwise it's only a matter of time before there is another war between the west and the east. It's inevitable as America wants to own and control the world.

Auburn Parks said...

The general public is filled with people that are stupid and intellectually lazy. If you can get public "intellectuals" to say something, there is a mass of people that will believe them simply because of arguments from authority. Its the old "If the Fed chairman says it, then it must be true" concept. Now to people fluent in science methodology, arguments from authority are obvious and a huge red flag, but to the lay masses they dont even know what the hell the logical fallacy "argument from authority" is. If people hear the MMT paradigm repeated in the media enough, they will believe it. Look how easily malleable public opinion can be, take the gay marriage movement, in 10 years, it went from huge majorities thinking "gays are ruining the country" to large majorities supporting gay marriage. And all it took was for enough people in power to publicly say that they support gay marriage.

Auburn Parks said...

Footsoldier-

I like your idea of a rapid deployment MMT, of course it would take a good amount of money and friendly bosses to allow that to happen. But I like the concept. The more successful case studies, the easier it is to make the argument.

Ignacio said...

The rich would get even richer under MMT. Business would prosper and grow much larger.

Ideology trumps logic and reality. Read the Hasselblatt article, that's the type of garbage we are dealing with... Must business/finance oriented newspapers are like this, and they express the mentality of management class, ie. people in power.

Ignacio said...

Also being wealthy and being powerful are two very different things, although sometimes related.

A lot of human relations are shaped around domination and coercion. Observing a human society is like observing a band of chimps. Sadly.

Footsoldier said...

Of course if Putin said Yes you and your team come over and set up our Brics central bank.

You have to be prepared for the backlash from your own country - Julian Assange, Bradly Manning style.

It will get very dirty but this is the battleground where it will be won or lost.

Footsoldier said...

Auburn Parks -

We should do it for free and bosses become very friendly when they are under attack.

It's the sales pitch that matters and how we get their attention in the first place. We should be organised and bothering the living daylights out of them right now.

We will know what country is next - We should be in there a year before the shit hits the fan preparing them and offering our services.

I'm suprised Warren didn't build on the success he had when he went to Italy to save them. I would have thought Italy would have been all over MMT after that.

Having said that he probably did but when Berlusconi and the mafia hijacked the country those views where extinguished.

We should be knocking down John Swinny and Nicola Sturgeons door right now once a week asking to speak to them and arrange a conference in Scotland.

I bet not one person has spoken with them.

Footsoldier said...

This has gone way beyond a battle of ideas. That ship has sailed long ago.

We need to see it for what it is and stop calling them stupid.

It's a financial war and they are war mongers.

Michael Hudson are calling them out and his idea to set up a new type of bank of settelments is a start.

We need to get armed and ready and get down and dirty.

How good would it be if we controlled the central bank of the Brics for example. That should be our first sales pitch along with Scotland and Greece.

If not find out who's next and act in advance. Earn their trust by telling them what's going to happen to them 2 years before it happens. Then when it does we'll get the call.

Ralph Musgrave said...

Warren Mosler’s ideas are too conspiracy theory. I suggest it’s all much simpler, namely that it takes a huge amount of effort and time to change the conventional wisdom. Look at the time and effort needed to persuade everyone that the Earth revolves round the Sun rather than vice versa. Or the time and effort needed to persuade people that democracy is the best, or least bad form of government.

Auburn Parks said...

Ralph-

Comparing the way information and knowledge spread pre-industrialization with the way info and knowledge spread in the social media age is a surefire way of saying nothing.

Footsoldier said...

It's my last post on the matter because it infuriates me.

We are too soft and weak like all of the left. These guys are ruthless and will do anything it takes. Which is why they are winning.

We have to adopt that attitude or fail as a group.

We can't even get organised enough to get Bill Mitchell a weekly piece in the Guardian newspaper.

Joe Bloggs can get an article published in the Guardian. That is how far behind of the competition we are.

If we aren't ruthless enough to get a weekly publication in the Guardian. Then what do you expect to achieve.

Dan Kervick said...

I really don't know what it means for MMT to "catch on". There is an assumption in that way of putting it that if people understood all of the various operational details about the the monetary system that MMT offers, it would really change the way they think about macroeconomics and economic policy. But I doubt it would - or should. There is just not that much there.

Anonymous said...

Mike or anyone else,

Can you recommend a published primer on MMT? I was considering L Randall Wray's updated MMT book that I see is being released in September. Is this as good a place to start as any? I should say that I am a left winger who is currently wrestling with the idea of the synthesis of MMT and socialism.

As for MMT and breaking into the mainstream. Don't forget it took the monetarists/neo-liberals 30-40 years for their ideas to infuse into the corridors of power from the first meeting of the Mont Pelerin Society. They were the cranks and the weirdos until they came to power. Of course, their economic philosophy is crank but the point is, is that their advocates, from the Universities to the politicians were unceasing in their energy and their determination. This is what MMT needs and if I may say, this website is an excellent example of the energy and determination required. Keep up the good work Mike!

The fundamental question as ever is as Robert Dahl posited in 1961- 'Who Governs'? The very simple concept that economics is not 'economics' but 'political economy' is almost entirely absent from mainstream economic debate. The technocrats of the ECB for instance hide behind 'neutral procedure and technical requirements' to wage class war on the 99%. The public at large are either alienated from economics through its seeming complexity or lulled into a false path through its 'simplicity'- Merkel's 'Swabian housewife' trope and by the propaganda of the ruling classes. Just look at the overwhelming popularity of Germany's actions against Greece at home. As all the while real wages and conditions drop in Germany.

If 'Who Governs' continues to be the pressing question, then so does 'What is to be done?'. Keep hammering home the message- in the Universities, in the corridors of power, on the internet, in popular media as much as possible. A paradigm shift in mainstream economic (political economic!) thinking takes decades. Keep plugging away.

Auburn Parks said...

Classic Kervick-

"But I doubt it would - or should. There is just not that much there."

You're right Dan, the realization that the Govt spending is not limited like your personal budget would have no effect on public discourse. Wait, every single reason every offered by the right wingers and centrist Dems against social and economic investment by the Federal Govt is based on the fallacy of "how to pay for it". And permanent full employment wouldnt do anything to change the current leverage and thus share of national income between labor and capital. Oh wait, thats right, the only time real median incomes have gone up is when unemployment got below 5% in the last 40 years, and we've fulfilled that condition less than half the time which has led to no real median income growth since 1989. You're so right Dan, MMT knowledge doesnt change anything. Give me a break Dan, how far your intellectual honesty has fallen in the last year. Its really embarrassing.

Salsabob said...

I'm with Musgrave (as usual) on this. It's the inherent intransigence to change of any system and simple human nature. Sure, a lot of rich people and even central banks but it's silly to believe they're all into some conspiracy to prop up a flawed system as oppose to just pursuing their individual human nature - most of them probable truly believe they're doing what's correct.

So what is it that MMT provides to human nature - well, the big one, and it is truly a very big one, it can remove the artificial constraints of central govt spending and tie it to the one true macro-economic constraint of possible harmful inflation. Whoopie, we can spend a lot more! Well exactly on what and how much of what on that or that or that or....

Take Social Security - well, lets first get rid of the silly notion that some trust fund is going to "run out." Let's decide that as long as no harmful inflation, let's do away with payroll taxes and fully fund all benefits. But why stop there? If no harmful inflation, why not SS at age 50 or how about any age regardless of any employment?

And what about all other federal programs? Why not star wars? Why not cure poverty in all of Africa as well as in the Western Hemisphere? I mean as long as harmful inflation doesn't threaten.

Seems like MMT is going unleash something that will make the "nuclear genie" seem like a piker. Good think we have so many adults in charge to make those decisions!

Oh,wait, nevermind.

Maybe this is genie that the masses inherently are afraid of, and perhaps for good reason?

But then again, that requires a little too much self-inspection. So, nay, like you all said, its all those Blue Meanie rich people and their central bankster puppets. Whoa, don't know about you but I feel better, more certain. That was a close one!

Anonymous said...

Higher barbarians desire power, honors, women, control. Not money.

Veblen's Theory of the Leisure Class provides as good a discussion of rich fuck psychology as any.

Greg said...

As far as finding wealthy people who could get behind most of what MMT espouses, I think Nick Hanauer is a guy who could be persuaded. Im sure there are others. Not all billionaires are selfish dicks (the overwhelming majority are). The forces that need to be overcome take a particular type of guy however, a fighter, and the opposition is organized, ruthless and will never stop fighting.

Even if Sanders were to be elected, Kelton were to be Treasury Sec, Fulwiler Fed chair, a living wage JG were pushed through and Medicare for all were instituted, the opposition would simply resort to KKK type tactics and guerrilla warfare. They would be trying almost constantly to keep our society in chaos. If they don't have the financial control they will use physical force. They do not wish to have a "society". They don't want the majority to be happy, safe and healthy.

Im actually encouraged that the Pope may push us more in the direction we want. His moral authority is unquestioned with the majority of the planet, even non catholics, and he is unafraid of the forces of evil he is opposing. Yes he rides around in a bubble but no one is shutting him up.

The Pope knows that our people without homes are not that way because we have a shortage of materials to build them or a shortage of people who know how to build them. He knows that our people with out food are not that way because we cant produce enough food per day on this planet to feed everyone. He knows that people without health care are not that way because we cant train enough people to administer care its just that we HAVENT! He knows that most of our real problems are problems of will not absence of resources.

Neil Wilson said...

"why would rich people fund this?"

Because you don't go for the rich people. You go for the *nearly* rich people and promise them you'll get the rich people out of the way (by shutting down most of the finance industry) so they'll be the rich people.

You find the wannabes

Even Hitler needed a backer to get him going.

Auburn Parks said...

SalsoBob-

The entire MMT project when boiled down to its most basic level is to re-jigger economics to worry about real constraints and not meaningless financial constraints.

So the question about how to solve our CO2 emissions problem goes from "how are we going to pay for it" to "do we have the technical know-how, labor, and real materials to generate a significant amount of renewable energy"? This change can not be underestimated.

Or take university level education as an example. For an extra 1% of GDP spending per year, we can have tuition free college education for all. Spending the money is way easier than raising taxes by $180 Billion a year or cutting $180 Billion from other programs with built-in constituencies.

MMT changes completely the entire paradigm of Govt spending calculus.

Tom Hickey said...

Mike, it is much worse than you picture.

The haves and have-nots have been locked in battle from time immemorial. The Right and Left are just modern manifestations of that battle.

The Right seeks to control the Left and in doing this it shown itself willing to extirpate the leaders and organizers of the Left if they really threaten the Right, and also to use force to overthrow Leftist governments when they come to power.

Violence is not the preferred method anymore, to the degree it used to be in the battle between the haves and have-nots. But it is in the background and brought forward as needed in a controlled way and often though agents to ensure plausible deniability. It's what the US accuses Russia of doing as "hybrid warfare." The US has perfected this.

Today, the Right can usually gets what it wants domestically in developed countries and also ensures that Rightist governments are in power in vassal states and colonies. Usually this happens through "normal channels." But there are ongoing instances of force being brought to bear even today when normal channels like democratic elections don't work as planned.

This is a big reason I continually say that the people at the top are thugs.

I could go on explaining the sociology and psychology of this, but the takeaway is that this is a fight to the finish and it is ongoing. Either be as good worker, or even a minion or a crony, or even rise to the top if one can, or else.

There has never been any reticence at the top about doing what it takes, even if that means confiscating assets and conscripting soldiers. Printing money pales in comparison. There is also always money made available for the haves when they need more than they can squeeze out of the have-nots quickly enough.

The stakes involved are huge and the players at the top are as ruthless as they think they need to be.

The hard Left like Stalin and Mao knew the stakes for them only too well and rushed to prepare for total war as quickly as possible and drove the resisting haves from the country into exile or extirpated those who remained. This is just the way the game is played. Americans get shocked that Stalin murdered and imprisoned a lot of people while acting as though the slavery that built the early American economy never happened and the genocide of the Native Americans that deprived them of their land never occurred, as well as the aftermath that is still visible in the ghettos and reservations, and the outsized prison population where solitary confinement is hardly exceptional.

This is all about power and a power structure is based on social (class) structure. Marx got this right, and while rightist economists deny it, sociologists have shown how it works. Leftist economists who try to incorporate this into either the profession or into policy are marginalized and even maligned. Look at what happened to Lorie Tarshis just for writing a textbook on actual Keynesian economics, for instance. His career was destroyed to "send a message." So we got stuck with Samuelson instead.

Expect to face similar treatment, if MMT can no longer be marginalized and it starts getting traction. Notice how even Bernie won't actually touch it even with Stephanie sitting at his elbow.

Krugman to Lietaer: "Never touch the money system."

The Just Gatekeeper said...

It will keep not happening until it does. Let face it, most of the MMT talking points and descriptions about money are far above what the general public is capable of understanding or even caring about. Its not fun or sexy like the social issues are, and gets to the deepest roots about power relationships and how societies are structured. Start talking about "what is money" and most people's heads hit the desk. This will have to be a battle among elite policymakers as it has in the past.

Marriner Eccles spent most of his adult life saying the exact same things we are, and it never entered into the popular consciousness. Hell, his ideas barely even made it into the elite discussions, although to a sufficient extent to create the New Deal and win the war. As soon as he left the Fed, he was completely forgotten. All the millions of people that benefited from Eccles' ideas never had a clue who he was or what he advocated for, as evidenced by the fact that many of them became conservative Republicans who proceeded to ruin the country.

The only hope is that Sanders becomes president, which seems more and more possible with each passing day. Hopefully, Dr. K will get a prominent position in his administration and bring some other MMTers along into high level cabinet positions. Then, and only then is there a chance to begin rooting out the deep-seated neoliberalism in Washington. I've already given more money to Bernie than I've ever given to all other politicians combined. I encourage all other MMTers to do the same...for purposes of self-interest if nothing else.

Jonf said...

I have also had a nagging feeling for some time now. Why would those with political power and money want to change anything? Better to call Bernie a socialist and let it go at that. The way forward to really full employment requires a very large redirection. If lightening struck and Bernie got elected he still needs a congress to pass legislation. Given the money in politics that won't change,not anytime soon. The best time to make a change is in crisis. Obama had a moment, but I doubt he understood what was before him. Heck he couldn't even take on health care effectively. So the stars all have to align to make it work.

I would say one other thing though. The left tends to eat its own, partly out of ignorance. And not all on the left have an interest in economics. This is a tough lift.

Tom Hickey said...

Don't forget it took the monetarists/neo-liberals 30-40 years for their ideas to infuse into the corridors of power from the first meeting of the Mont Pelerin Society. They were the cranks and the weirdos until they came to power.

Not exactly. See Founding Participants at https://en.wikipedia.org/wiki/Mont_Pelerin_Society

Tom Hickey said...

Sure, a lot of rich people and even central banks but it's silly to believe they're all into some conspiracy to prop up a flawed system as oppose to just pursuing their individual human nature - most of them probable truly believe they're doing what's correct.

This is true. The culture and institutional arrangements make it second nature for privileged people either to fail to realize they are privileged or to accept it as their due. It took me serving in the military during Vietnam to begin waking up to this and quite a while longer to get a handle on it. Since it is second nature it is very difficult for an individual to overcome it completely and I would never make the claim that I have, But at least I have tried.

The same goes for the victims of the system. They are programmed by the culture and institutional arrangements also. Marx realized this. He posited that a vanguard would be needed to assist the victims to deal with Stockholm syndrome. It's part of "consciousness raising in Marx's sense.

John said...

Warren Mosler is probably right. But it may depend on the occupation and its institutional structure. People in authority certainly know the truth.

For instance:

* Did tobacco companies really believe that smoking was good for your health?
* Do junk food manufacturers really believe that their products are wholesome? That they're not addictive? That they don't cause health problems?
* Do those in power believe contracting out public services at extortionate costs to the private sector is "efficient" and a good use of taxpayers money?
* Do the energy companies who fund the climate change deniers really believe this nonsense?
* Did those in power really believe that Iraq had WMD?
* Do those in power believe that all the invasions and wars has nothing to do with the rise of ISIS?

The idea that reasoned argument is all it takes to win them over or that they're simpletons who need to be educated is absurd. They're fully aware of the truth, but there is too much at stake, and if you win them over they're toast.

That is not to say that ideology isn't a very strong component in certain occupations. Journalism is one example of an occupation saturated in ideology, although some in the profession are just titanic liars. Most journalists probably genuinely believe the nonsense they spout. You don't get far if you report that everything said by those in authority is a pack of lies. In the case of journalists, Upton Sinclair was right: "It is difficult to get a man to understand something, when his salary depends on his not understanding it."

Tom Hickey said...

Higher barbarians desire power, honors, women, control. Not money.

Veblen's Theory of the Leisure Class provides as good a discussion of rich fuck psychology as any.


It's funny but the wealth and powerful people in the US fifty or so years ago saw the pinnacle as marrying into European aristocracy or at least hanging out with them.

Tom Hickey said...

So the question about how to solve our CO2 emissions problem goes from "how are we going to pay for it" to "do we have the technical know-how, labor, and real materials to generate a significant amount of renewable energy"? This change can not be underestimated.

Watch what happens when the vise tightens enough to create panic among the ruling elite. But it will probably be too late by then. The tipping point will already have been reached, which is why there will be panic.

Dumb and dumber.

Butch Busselle said...

You do whats right and you do what you can. To do otherwise betrays who you are now that you've learned the truth. If you have the resources you get rich and do like Mike suggests. If you can do what Foot Soldier is saying and join the MMT Special Forces, you do that. But you don't sit down, you don't shut up and you sure as fuck don't roll over. This war may never end but I for one can't deny the hope MMT has brought.

Nebris said...

I think about this and think about this and I always seem to come back to this quote; "I, John Brown, am now quite certain that the crimes of this guilty land can never be purged away but with blood."

Salsabob said...

Auburn Parks - it just makes the central govt pie bigger and a lot of people are philosophically opposed to that even if it just providing funds to folks to spend and objectively not trying to take their guns away. Moreover, global warming is not going to be resolved by govt spending alone; its going to require lots of game changing it the private sector as well.

But even putting all that aside, you're making the pie much bigger doesn't mean hard decisions don't have to be made on how to cut it up, and it also doesn't mean that a lot of people are going to give up on sloshing around in it - in fact, it provides more incentive to try with bigger potential payoffs.

MMT doesn't come necessarily come with a new govt decision process and certainly doesn't come with a certainty of smarter statesmen decision makers.

Nuclear energy has done a lot of good but it has also done a lot of bad and potentially it could be catastrophic on a global scale. Fully-implemented MMT carries the same degree of benefits AND risks. That's pretty damn scary. Any MMT proponent who hasn't moved beyond scratching their heads about why dumb/evil people haven't gone all out with the obvious economic benefits offered by MMT need to take their blinders off and think a little more outside the economics box.

Salsabob said...

Sorry for those typos - fat fingers or dementia or both. How about a post-posting edit function - so I don't have to look so stupid?

hog said...

Or the time and effort needed to persuade people that democracy is the best, or least bad form of government.
Don't make the mistake to take "ancient wisdoms", which posit that humans are no different from packs of wolves, at face value. It seems to me that a lot of the "pre-democratic" societal structures, as they are known to us are the result of some rather careful social engineering rather than the result of some innate human drive for authority. (To the contrary, humans are anti-authoritarian by nature)
Many people find that their own instincts deviate from these "ancient wisdoms" and thus make the mistake, when they band up with like-minded individuals, to think they will create "new forms of democracy".
Thus they are doomed to repeat history.

Auburn Parks said...

salsabob-

Nobody I know of in the MMT community has ever held the position that MMT understanding will answer all the questions of society and distribution, only that once money scarcity is not the fundamental hurdle, then are aggregate options become clear. Only that blurring the lines of what is possible with notions of balanced budgets, deficit neutral programs etc is a surefire way to not maximize social welfare. How many times have you heard that this or that program is not viable because it doesnt "pay for itself"? But when your spending capacity is infinite, how are private sector notions of ROI even relevant? They are not, its only the myth that GOvt spending works just like your personal spending that allows private sector notions like ROI to be given a heavy weighting in policy discourse. When in reality, private sector concepts like that are completely irrelevant to what determining what is good public policy.

Bob said...

Bernie Sanders calls himself a democratic socialist. Historically, democratic socialists 'play for keeps' i.e. their goal was to make capital subservient to labour.

Are you looking for a political movement that can use MMT as a tool to achieve their aims?
Are you seeking to make MMT a political movement in of itself?

Anonymous said...

Vision is the most important of our senses; in fact it can be thought of as a refinement and extension of the other senses. The mind synthesises information from the senses. For me, the human heart is the dawning, seventh sense! And extension of vision.

Human progress is therefore, always from one revelation to the next (in terms of vision). A curtain lifts from over the same environment that you have stared at for years, and everything is seen in a new 'light' (understanding).

Therefore, you have to change what ordinary people see – its called education (Bill Mitchell's focus). People actually love to learn. There are many more people on this planet than the dinosaurs of greed. Never under estimate the power of a human being to seek out more light. Especially when they are focused - whole empires are pushed aside.

Today, I think, we are watching the curtain being lifted yet again, and who knows what we will see. There is an energy, an urgency to our Age. Issues are being clarified. If it's more than 50% good then we are ahead – even today it is more than 50% good. Water the roots ….

Greg said...

jrbarch

Good comment. I like your last line and I agree its more than 50% good. I think its more than 66% good. But the dinosaurs of greed (excellent phrase) can be quite destructive, especially if they start to lose. They are sore sore losers. It will likely be very ugly.

Bob said...

All good comments. MNE at its best.

Joe said...

I think there's 3 main reasons MMT hasn't caught on. The the conclusion is MMT needs a 5 minute animated video visually showing how flows in the economy sum to zero, deficits=surpluses, and explaining how loans work and where money comes from. This stuff isn't hard, so 5 mins should be enough, but it needs to be done right though..

1. Ignorance/natural inclinations/inertia. The myth that govt budget is just like a household is the common sense, naive view. Almost impossible to dislodge, ppl don't easily change their minds. Few people understand the fallacy of composition. For one person "living within their means" accumulating savings, means another entity must run a deficit. You just can't get this into most people's head by using words, I think they're just incapable. -Hey, if we just all work hard we can all run a surplus... The average person just isn't able to mentally see that flows must balance, hence the visual video. That's not to knock people, everyone has different natural talents.

2. Economists are paid to not understand. The elite use the "govt is out of money" to constantly beat back the working classes, and economists provide the intellectual cover. It's just another form of class conflict, the dominant social story of the last few thousand years, nothing new here. Obviously austerity can't work, but yet it's shoved down people's throats, that's intentional and well understood by elites.. Combine this with human cult behavior and you end up with a brick wall. Take the case of Dean Baker, he's notionally progressive, he basically understands all the pieces of mmt, but refuses to put them together into a whole. I'm convinced he's fully aware of it, but if he were to actually say it as a coherent whole, then he runs into the cult and is deemed a crank. He'd no longer be considered a Very Serious Person (TM).

3. MMT messaging and pedagogy. I personally think the major point of emphasis needs to be on the sectoral balances, the UKMC crowd is dismal at emphasizing this. I think you can understand about 70% of economics by the sectoral balances alone. Understanding how loans increase spending power (not transfer it via loanable funds) gets you to about 85% (Keen is excellent on this point), understanding govt must create money first gets you to 90%, and then you get all this biz about competitiveness and tax rates and such. But the overwhelming driver of it all is the sectoral balances - **Someone must spend a dollar for you to earn a dollar** and that spending must come from somewhere, one acct goes up, another goes down...
Sectoral balances alone rules out austerity completely... Germany can't run a trade surplus without someone else running a deficit. Govt surplus means a non-govt deficit. All couldn't be more obvious, yet no one understands it...
People intuitively understand that they should run a personal surplus, so it needs to be explained that a non-govt surplus necessarily means a govt deficit, since your income is someone else's spending.

National debt = non-govt net savings naturally falls out of understanding the rest of it.

Just my 2 (2000) cents..

Tom Hickey said...

I would recommend an engineering-systems approach showing how real resource availability plus the existing stock of knowledge is capable or creating a desirable future in all nations individually and in the global economy as a closed system. This needs to be the lede. Don't bury the lede.

Then show how affordability is not an issue given existing institutional arrangements.

Use lots of graphics.

This is basically Bucky Fuller's World Game coupled with MMT analysis.

World Game, sometimes called the World Peace Game, is an educational simulation developed by Buckminster Fuller in 1961 to help create solutions to overpopulation and the uneven distribution of global resources. This alternative to war games uses Fuller's Dymaxion map and requires a group of players to cooperatively solve a set of metaphorical scenarios, thus challenging the dominant nation-state perspective with a more holistic "total world" view. The idea was to "make the world work for 100% of humanity in the shortest possible time through spontaneous cooperation without ecological damage or disadvantage to anyone,"[1] thus increasing the quality of life for all people.

Economist and general systems theorist Kenneth Boulding worked along these lines, too. See, for example, The World as a Total System.

This is not a new approach. It needs to be resurrected and updated, like John Kenneth Galbraith's The Good Society.

Joe said...

Leave it to Tom H. to lecture on how the Right and Left are both part of the problem. But proceed to slam the Right for overthrowing left-wing tyrants, and counterbalance his thesis by explaining left-wing atrocities committed by Mao and Stalin as being reactionary to the Right. That is laughable. Only left-wingers like Tom have that sort of perverse sense of moral equivalence.

Tom Hickey said...

The world has been dominated by the haves since the origination of surpluses. Almost the only times that this was not the case was with the Communist revolution, which like most revolutions get hijacked by the powerful, who then become the new haves.

What else is new?

To get outraged over the putative sins of the Left, greatly magnified by propaganda, btw, ignore the rest of history that belongs to the haves is either evidence that one is a member of the haves or a victim with Stockholm syndrome.

Jose Guilherme said...

@ Unknown
My feeling is that the waterboarding of Tsipras was an effort to push him to taking the Grexit option. But unfortunately, that way was not chosen

Spot on!

If Tsipras was a real leader he would have accepted the German proposal for Grexit and then make it pass through the Greek Parliament.

Greece would now be on its road to freedom - and full recovery from the disastrous euro-induced crisis.

Instead it's chosen more senseless and endless suffering. What a shame.

Dan Metzger said...

The answer lies in this self-indicting quote recalled from the real gold-standard days of 1863. To their associates in New York, the Rothschild brothers of London wrote,

“The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.”

Derek said...

So I have a couple relatives who are bankers, pretty conservative, great guys. I suspect that they would recognize the importance of most points that MMT tries to make, but they would be uncomfortable with all the implications.

In some ways I find the MMT community a little bit too homogenous. Sure, MMT lays bare the nature of financial and political relationships, but sudden clarity is not the same as years of experience. In a sense MMT only works because of the disciplined accounting and financial practices that people dedicate their lives to understand and support. These people understand that chasing after the wrong set of ideas could unravel everything built up with years of hard work and strict institutionalized rules.

If people who have spent their lives in banking fail to be blown away by a disarmingly simple explanation of their lives' work we shouldn't be surprised. If they have spent years looking at finance a certain way it's going to be hard for them to reboot their old way of thinking. Accepting MMT would require them to reframe all their thought processes, it's not a trivial cerebral exercise even though MMT itself may not be that complex.

People in finance who don't understand/embrace MMT aren't stupid or incompetent, but their mental tools for evaluating the space lack the clarity to justify aggressive and revolutionary changes. They purposely wall themselves off from political considerations to allow them to fulfill their important role without distraction.

It's like when someone from an older generation has never used a computer. They would not understand/trust everything it could do. That doesn't mean they aren't otherwise great at their job, but until they accept and integrate the true nature of the abstraction of all information as bits their capacity to use the new medium will be limited.

We're seeing a crazy intersection of financial and political worlds. Expecting an electorate to embrace ideas that the financial world is struggling to assimilate is not a small thing. Even so, it is painful to watch the political helplessness that comes from this ignorance. Normal people may want to accept the things the MMT community is saying, but the MMT community lacks the maturity and stability to assuage the fears of intellectual dependents. People need to feel secure and safe, and it is too easy to scare them by talking about money, which as everyone knows is a very serious thing. It is an emotional and scary subject for many people.

It's almost like the movie the matrix where we expect the world to be complex, difficult, and painful. Anyone telling us otherwise must be wrong.

People with authority and prestige in the financial world probably find a great deal of assurance from the sophistication and regularity of their craft. Something like MMT telling them that some basic financial parameters are silly and unnecessary would not be comfortable.

I don't know I talk too much, but that's my brainstorming on the subject, loved the post, got me thinking!!!



PeterM said...

MMT is catching on. Maybe not as quite as quick as we'd like but it's getting there.

I'm not totally sold on the argument that the ruling class do understand MMT but deliberately suppress it. Though I agree its hard not to think that way at times!

If they did understand MMT, would they let the 2008 crash occur? That wasn't in their interests. Neither is it in their interests to have the eurozone continue in its current shambolic state.

I'd say they were learning and have learned since 2008, as we all have, but the conventional paradigm is still strong. There's just too many highly placed individuals who either won't or can't admit they were wrong.

financial matters said...

Wray's primer is definitely a good place to start. Ingham's 'The Nature of Money' is an excellent complement adding in some important social and political aspects.

financial matters said...

I thought this was an interesting example.

I think MMT has a bit of a conundrum in that it views taxes as the very linchpin that gives currency its value but then states that they are not necessary for spending.

Almost the very definition of a sovereign currency space is that the state has the power to collect taxes which creates a demand for the currency. This power and its ability to enforce it is a large part of what the state brings to the public/private partnership.

But why would people or corporations want to pay taxes if they are not necessary for spending?

Ingham in ‘The Nature of Money’ has an interesting comment:

“As Wray has pointed out, if high-powered money grew on trees, it would be worth very little (Wray 2004: 106). High-powered money is the result of the struggle between debtors’ demand for money and creditors’ belief that the state can service its debt, which in turn depends on tax revenues. And it is the need to work for a taxable income that gives it value.”

Taxes, I think, can be seen to contribute to the public purse in a somewhat indirect manner. They are part of the social relationship that binds together public and private purpose. They can help deal with inequality when done in an anti-regressive manner.