Thursday, June 8, 2017

Terry Sullivan — Austerity Is A Sham: The Road to Resilience

Suppose the federal government could make money out of nothing and spend it freely. Suppose they could do it not only without raising taxes, but possibly lowering them, and that the country would thrive on full employment. This sounds like the kind of promise that a snake oil-peddling politician might be able to buy some votes with. Amazingly enough, there is a possibility that such a scenario could turn out to be true.
Recently, a friend of mine sent me a video explaining the doctrine of Modern Monetary Theory. In the most recent The Nation magazine (May 22, 2017), there is a feature article on it. Economists such as James Galbraith, Dean Baker, and Paul Krugman have quietly admitted that the theory has a sound basis, but it is so counter to the prevailing beliefs and so outrageous, economists don’t seem anxious to promote it for fear of losing credibility in the field. Very few of us are given the gift of certitude when it comes to judging economic theories, and I certainly am not one of them, but this theory has serious economists risking their reputations in promoting it….
Word is getting around. This isn't a great post on MMT, but it is a start.

Criticism is invited.
Comments? (please tell me what’s wrong with MMT):
terry@vashonloop.com
The Vashon Loop

2 comments:

Ralph Musgrave said...

Here's a list of 20 economists who were advocating austerity at the start of the recent crisis:

https://www.project-syndicate.org/blog/unrepentant-economists-by-robert-skidelsky

Why haven't they been sacked? Because "professional" economists spend their time covering for each other, and scratching each other's backs.

AXEC / E.K-H said...

MMT: No sound basis
Comment on Terry Sullivan on ‘Austerity Is A Sham: The Road to Resilience’

Terry Sullivan writes: “Recently, a friend of mine sent me a video explaining the doctrine of Modern Monetary Theory. In the most recent The Nation magazine (May 22, 2017), there is a feature article on it. Economists such as James Galbraith, Dean Baker, and Paul Krugman have quietly admitted that the theory has a sound basis.”

Everybody can climb on a soap box and make a save-the-world economic policy proposal EXCEPT an economist because: “In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)

The problem is that economists do NOT have the true theory. The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and ALL got profit wrong. This includes MMT.#1

Economics claims to be a science but is NOT. Economists claim to know how the economy works but do NOT. From this follows that economic policy guidance with regard to monetary, fiscal and employment policy has NO sound scientific foundation. This applies to orthodox and heterodox economics and this applies to the whole issue of austerity.#2

Egmont Kakarot-Handtke

#1 See ‘Where MMT got macro wrong’
http://axecorg.blogspot.de/2017/04/where-mmt-got-macro-wrong.html

#2 For the details of the bigger picture see
Austerity and the idiocy of political economists
http://axecorg.blogspot.de/2017/03/austerity-and-idiocy-of-political.html

Austerity and the utter scientific ignorance of economists
http://axecorg.blogspot.de/2015/12/austerity-and-utter-scientific.html

Austerity and the total disconnect between economic policy and science
http://axecorg.blogspot.de/2017/05/austerity-and-total-disconnect-between.html