Tuesday, April 3, 2018

Bill Mitchell – My response to a German critic of MMT – Part 3

This is the third (and final) part of my response to an article published by the German-language service Makroskop (March 20, 2018) – Modern Monetary Theory: Einwände eines wohlwollenden Zweiflers (Modern Monetary Theory – Questions from a Friendly Critic) – and written by Martin Höpner, who is a political scientist associated with the Max-Planck-Institut für Gesellschaftsforschung (Max Planck Institute for Social Research – MPIfG) in Cologne. Today, we will discuss inflation and round up the evaluation of his input to the debate. The overriding conclusion is this. As a researcher, I am instinctively driven to dig deep before I make public comment. It is easy to think you have an idea that is novel and then venture forth with it. One usually finds, fairly quickly, once you start digging into the literature, that the idea is anything but novel. Modern Monetary Theory (MMT) has been around for around 25 years now (give or take) but has really only gained traction in this era of social media (blogs, tweets, YouTube, etc). When I make presentations to a new audience I am regularly asked the same questions, over and over. Which is understandable in a public forum. But I expect researchers, especially those associated with highly credible institutions such as the Max Planck Institute in Köln, to first of all do their research before they make public comment. Many of the issues raised in the Makroskop article have been ‘done to death’ over the last 25 years. Many academic and non-academic articles have been written by us on these issues. One may not agree with the conclusions or our analysis but raising them as if we have never thought about them or discussed them in rather minute detail is not a very ‘friendly’ strategy.
Bill Mitchell – billy blog
My response to a German critic of MMT – Part 3
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

9 comments:

Matt Franko said...

"But I expect researchers, especially those associated with highly credible institutions such as the Max Planck Institute in Köln, to first of all do their research before they make public comment. "

They are Art Degree people ie not trained in research methods and not qualified... they were trained in "write a paper..." not "measure and record the output...", etc...

Matt Franko said...

"Neoliberal framing has deliberately invoked language and the use of metaphors to hide the fact that a currency-issuing government is not financially constrained."

The "neoliberal conspiracy!" strikes again !!!!!

Matt Franko said...

So this is textbook MMT fail 101:

Bill FIRST says here: "But I expect researchers... to do their research... before they make public comment"

THEN..... they DON"T.... they manifestly DO NOT... they NEVER do...

THEN he says via a complete fabrication:

"Neoliberals... deliberately invoked language and the use of metaphors to hide the fact that a currency-issuing government is not financially constrained."

When he just got done telling you that they are not competent scientists in the first place... he for some reason has to fabricate a conspiracy theory in an attempt to explain what is happening...

This thought process is hard to understand... and continues to get nowhere...



AXEC / E.K-H said...

MMT vs Neoliberalism: just another clown show fight
Comment on Bill Mitchell on ‘My response to a German critic of MMT ― Part 3’

Bill Mitchell criticizes the MMT critic Martin Höpner: “But I expect researchers, especially those associated with highly credible institutions such as the Max Planck Institute in Köln, to first of all do their research before they make public comment. Many of the issues raised in the Makroskop article have been ‘done to death’ over the last 25 years.”

Indeed, the whole discussion is standard MMT stuff. Over the last 25 years, MMT has conditioned the public parrot with a handful of catchy slogans:
• There is a fundamental difference between currency issuer and currency user.
• The common-sense household analogy does not hold ― neither in the short run nor in the long run.
• Tax revenue is not required to fund public expenditure.
• A currency-issuing government is not financially constrained.
• The government never runs out of money.
• Taxes make that people accept fiat money.
• Government spending is the precondition of taxation.
• Inflation can at any time be contained through taxation.
• Public deficits supply the economy with money.
• Public deficits create financial assets for the non-government sector.
• Growing public debt is no problem, the currency issuer can never go bankrupt.

This set of slogans is only 50 percent economically true but 100 percent politically effective.#1

Against the MMT promise of a bright future for the people, Martin Höpner argues psychologically that if the public realizes that the government is not financially constrained all hell will break loose, with the result of reckless spending, inflation, and ultimate economic collapse. This, of course, is soapbox economics. Consequently, Bill Mitchell has no difficulty to debunk Martin Höpner as useful neoliberal idiot.

In essence, MMT argues that public deficit is good for the ninety-nine-percenters and for democracy. The fact of the matter is that public deficit is good for the one-percenters and for oligarchy.#2 The macroeconomic Profit Law says Public Deficit = Private Profit and here lies the fundamental scientific error/political fraud of MMT.#3

This is why the spectacular MMT vs Neoliberalism wrestling has NOTHING at all to do with economics but only with mob entertainment in the Circus Maximus.

Egmont Kakarot-Handtke

#1 For the full-spectrum refutation see cross-references MMT
http://axecorg.blogspot.de/2017/07/mmt-cross-references.html

#2 MMT is dead: An unfriendly critique of Bill Mitchell
http://axecorg.blogspot.de/2018/03/mmt-is-dead-unfriendly-critique-of-bill.html

#3 Keynes, Lerner, MMT, Trump and exploding profit
http://axecorg.blogspot.de/2017/12/keynes-lerner-mmt-trump-and-exploding.html

ANC Driver said...

"Overall economic conditions are especially favorable when
the households (private and public) dissave (cf. Wray, 1991, p. 962)."

Unless you own the businesses your only ever going to be a worker who earns a wage, and so we must fatten the pockets of the 1%ers because they are the only ones going to give you a job (we can't have jobs without profits). But as economic times get better, some of these wage earners like to jump on the 1% bandwagon and start accumulating financial assets themselves which means more demand for distributed profits and on and on we go with ever increasing instability!

It's a strange feeling knowing that being debt free and always spending less than I earn I am contributing to the instability of employment!

AXEC / E.K-H said...

ANC Driver

When you cite me you should supply the reference. So: “Overall economic conditions are especially favorable when the households (private and public) dissave (cf. Wray, 1991, p. 962).” (Kakarot-Handtke, 2001, p. 17)#1

You say “It’s a strange feeling knowing that being debt free and always spending less than I earn I am contributing to the instability of employment!”

The point to grasp is that the monetary economy is either exploding or imploding (in slow motion) and this is why the concept of equilibrium is sheer methodological madness and this is why all supply-demand-equilibrium economics is scientifically worthless since 140+ years and this is why one can use almost the whole stock of economic journals/textbooks for winter heating without any loss of valuable scientific knowledge.#2

The other point is that MMT articles/posts in general and Bob Mitchell’s, in particular, is also pulp science because MMTers get the relationship of macroeconomic profit/saving since 25 years wrong.

Egmont Kakarot-Handtke

#1 Squaring the Investment Cycle
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1911796

#2 Could we, please, all focus on the key question of economics?
http://axecorg.blogspot.de/2016/05/could-we-please-all-focus-on-key.html

Kristjan said...

How long have you been parroting this profit bs? Every time I see your comments it is: "MMT gets the private profit wrong" bullshit.

ANC Driver said...

Not sure why people call it bs...its the only exposition of profits which reflects the law on property, contract, debt, trusteeship, agency, banking, bankruptcy and taxation, and what reflects the papers released by the Bank of England in 2014 on what money is and how money is created, and which reflects history. Most other theories either rest on some sort of barter or equilibrium foundation which has virtually nothing to do with money and therefore nothing to do with the laws on property, contract, debt, trusteeship, agency, banking, bankruptcy and taxation, or they rest on some sort of notion that financial wealth is tangible and infinite and can be enjoyed by all (like MMT does), which again does not reflect the laws on property, contract, debt, trusteeship, agency, banking, bankruptcy and taxation.

All these law sets basically exist for one major reason and thus rest on one simple principle - someone owes a debt to someone else and these laws exist to make sure the debt does not go unpaid. Equity always regards as done that which ought to be done. If profits were anything else other than as AXEC has described it, then all these law sets would not need to exist.

AXEC / E.K-H said...

Kristjan

You ask: “How long have you been parroting this profit bs? Every time I see your comments it is: ‘MMT gets the private profit wrong’ bullshit.”

How long has MMT been proclaiming that public deficit is good for the ninety-nine-percenters and for democracy while the fact of the matter is that Public Deficit=Private Profit is good for the one-percenters and for oligarchy?

How long are Bill Mitchell, Stephanie Kelton, Warren Mosler and the rest of MMTers presenting a provably false balances equation to the public and pushing the agenda of Wall Street?#1

How long does it take you to stop reading my posts or to understand the clear-cut proof of MMTers scientific incompetence#2 or to return to your cozy couch and never stop again watching Goofy & Friends?

Egmont Kakarot-Handtke

#1 Down with idiocy!
https://axecorg.blogspot.de/2017/12/down-with-idiocy.html

#2 For the full-spectrum refutation see cross-references MMT
http://axecorg.blogspot.de/2017/07/mmt-cross-references.html