Sunday, February 10, 2019

Sig Silber — Conflation Of Monetary Operations With Public Policy Options Is Confusing The Public MMT Debate


Finally, some constructive criticism of MMT. 

Civil engineer and manager Sig Silber suggests many points that he feels need to be addressed in debate. They are well taken. No doubt many encountering MMT will have similar questions.

MMT economists have anticipated a number of them and addressed them already. Some just disappear on correct understanding of MMT. The remaining one are generally political issues as much as economic, which MMT also admits. Such issues have to be decided politically, but decisions should be properly informed before making choices. Open inquiry should precede judgment. However, in the end judgment often involves normative matters in addition to positive.

Sig Silber rejects paternalism and "the noble lie" as an argument against MMT:
I also do not agree with many current Federal Programs and others that have been suggested by MMT’ers. But that is a separate topic from whether or not MMT is correct - and whether or not it inherently has unpleasant side effects. The two authors [Lance Roberts and Michael Lebowitz] may be making the point that MMT encourages unwise expenditures which are political in nature rather than based solely on what might improve the economy. Again, that is a separate topic but well worth discussing.
Arguing that MMT is inherently dangerous because the information makes it possible to do unwise things is like saying that any explanation of how something works is inherently dangerous because this understanding makes it possible to do unwise things. I find that an improper way to review an explanation which is part of - and the key part - of MMT. Improper use of the information is certainly possible but to assume this will necessarily happen is speculative….
He adds a concern that many people have and which also needs to be debated:

I will add one more additional concern which I phrase as two questions:
  1. “Is an economy that is managed so as to never have a recession because it is managed to always be at Max Capacity or at some predetermined level below but near Max Capacity, a good idea?" (This question is separate from issues related to price stability and debt per se.) 
  2. “Will such an economy ossify?"
Question one depends, of course, on the criteria of "good," which is a normative terms unless naturalized. It opens the door to ideologically based assumptions and framing from particular points of view. Moreover, defenders of the current system would argue that this is what the existing system does using NAIRU, which involves defining down "unemployment." 

Question two is often phrased as an objection rather than a question by "free market" economic liberals who regard economic contractions as culling through nature taking its course. This assumes that recessions are positive in that they purge inefficiency from the economy. That is a very general assumption. What is the empirical foundation for the assumption and what do the facts show historically. 

Based on inquiry there are good reasons to doubt the assumption in the first place, and secondly to question its practicality in that it appears that a lot of other capital has been destroyed in the process and the social and political costs have been high. 

This aspect of the question can be boiled down to whether efficiency is to be preferred over effectiveness.  Management über-guru Peter F. Drucker pointed out in The Effective Executive that while efficiency is doing things right, effectiveness is doing the right things. Sacrificing effectiveness for efficiency is seldom good management, if ever. Both are important but must be prioritized to be correctly balanced.

econintersect
Conflation Of Monetary Operations With Public Policy Options Is Confusing The Public MMT Debate
Sig Silber is active in water and natural resources policy issues in New Mexico. He is a Supervisor of the Santa Fe- Pojoaque Soil and Water Conservation District, the President of the New Mexico Weather Modification Association, and a Member of the American Society of Civil Engineers (ASCE) Environmental & Water Resources Institute (EWRI) Atmospheric Water Management Standards Committee. In the 2003 round of Water Planning in New Mexico, he was the Chair of the Technology Committee of his area's Regional Water Planning Council and has recently served as a Member of the Santa Fe County Water Policy Advisory Committee. Mr Silber was a senior executive of a Fortune 500 Mining Company and has extensive experience in the information technology industry. Mr. Silber's firm provides business planning services in the areas of his expertise. He is currently researching the global long-term economic and geopolitical impacts of climate change.

12 comments:

Andrew Anderson said...

Sacrificing effectiveness for efficiency is seldom good management, if ever. Tom Hickey

Yet you (Tom Hickey) have often praised a JG as efficient without regard to the injustice of making victims work for restitution.

Calgacus said...

Andrew Anderson:

Jesus was squarely for a JG.

Read Matthew 20, especially the beginning, The Laborers in the Vineyard, but also much else there.

The basic and ancient argument for the JG is not efficiency, but justice.

A monetary economy without a Job Guarantee is unjust to the point of insanity. A JG is not making victims work for restitution. It is restitution to victims, a restitution that your plans blindly and unjustly deny.

Andrew Anderson said...

a restitution that your plans blindly and unjustly deny. Calgacus

Having read the entire Bible, the Biblical ideal for citizens is to own the means of production roughly equally; wage labor was foreigners and temporarily for mis-fortunate citizens.

Calgacus said...

That's not what Jesus said. Whatever your ideal is, is it ideal - or realistic - to ignore that reality never matches it?

That whole chapter refutes that kind of thinking, which is more like that of the rich young man immediately preceding, in Matthew 19.

Andrew Anderson said...

The ENTIRE Bible, including the Old Testament, is the Word of God, according to the Bible and thus one should expect to find it consistent.

I find it consistent. Do you?

Then until you do, please don't lecture me on what it says.

But know this first of all, that no prophecy of Scripture is a matter of one’s own interpretation, for no prophecy was ever made by an act of human will, but men moved by the Holy Spirit spoke from God. 2 Peter 1:20-21 New American Standard Bible (NASB) [bold added]

As did Jesus, Son of God as He is.

Ralph Musgrave said...

I think I can get to grips with economics without consulting prophets who were wandering around the Middle East around 2,000 years ago.

Calgacus said...

Ralph Musgrave: Yes, but it is of interest what they said. As Michael Hudson has noted:
1) the ancient Mesopotamians were pretty good economists.
2) The ancient Hebrews a bit later improved on them and
3) Jesus went beyond the ancient Hebrews.

I'm just pointing out haw far. Jesus supported fixed wage employment offered to all, that put the needs of, the demands of, "the bottom", first. (The last shall be first, the first shall be last.)

I know you don't support the JG very much. I think your criticisms are not correct.

AA: So wage labor is for foreigners and temporarily mis-fortunate citizens. Fine. Aren't they human beings? Jesus put them first. See also Matthew 25.

More power to you if you try to read the whole Bible in a consistent manner. .
But how do you do this and oppose and belittle a job guarantee, considering that the Bible includes Matthew 20?

I don't see any way.

Noah Way said...

To hell with MMT. Bible Economics!

Andrew Anderson said...

But how do you do this and oppose and belittle a job guarantee, considering that the Bible includes Matthew 20?

I don't see any way.
Calgacus

Because you haven't read the Bible enough is the reason since throughout the Bible aliens were to be well treated.

Moreover, generosity and kindness are desired and encouraged in the Bible but justice is REQUIRED.

He has told you, O man, what is good;
And what does the LORD require of you but
to do justice,
to love kindness,
And to walk humbly with your God?
Micah 6:8 NASB [bold added]

Calgacus said...

Andrew Anderson: Because you haven't read the Bible enough is the reason since throughout the Bible aliens were to be well treated.

Fine, you're right. I haven't read it all. But then please enlighten me. How do you make your position on the Job Guarantee consistent with Jesus's? What other part of the Bible helps one understand this?

Jesus says that if you wait in the marketplace for a job then you are given one. No exceptions. You don't seem to agree. It seems to me you mock and deride this idea.

1 For the kingdom of heaven is like unto a man that is an householder, which went out early in the morning to hire labourers into his vineyard. ...

6 And about the eleventh hour he went out, and found others standing idle, and saith unto them, Why stand ye here all the day idle?

7 They say unto him, Because no man hath hired us. He saith unto them, Go ye also into the vineyard; and whatsoever is right, that shall ye receive.

8 So when even was come, the lord of the vineyard saith unto his steward, Call the labourers, and give them their hire, beginning from the last unto the first.


*******************

Noah: Well, like I said, following Hudson, Jesus was a pretty good economist. Whatever one believes, it is pretty good propaganda for MMT, I think. European & American etc culture is filled with Christianity; it is familiar even to the most ardent atheist and can efficiently get the message across to everyone with a punch.

Andrew Anderson said...

Does it ever occur to you that the need for so many people to be wage slaves just maybe, might, somehow, possibly indicate an UNJUST system to begin with?

And that if we had a just system that the need for charity would be so slight that normal (on average) human compassion and generosity would suffice?

But what's really galling is that a JG is promoted by those who favor INCREASED privileges for the cause of so much injustice in the first place - government-privileged banks!

Calgacus said...

Does it ever occur to you that the need for so many people to be wage slaves just maybe, might, somehow, possibly indicate an UNJUST system to begin with?

It could. Injustice can cause more paid employment. But in your system, because it has money, there will be people looking for money. You can either employ them when they want money, as Jesus said. Let them be "wage-slaves" when they want to be. Or not, as you say.

And that if we had a just system that the need for charity would be so slight that normal (on average) human compassion and generosity would suffice?

Jesus isn't talking about charity there, but justice. The Job Guarantee is not charity. It's justice, giving working people "whatsoever is right". The job guarantee, the "lord of the vineyard" is not paying people to waste their time. It's a job (offer). A normal job.

Jesus is saying that without offering jobs to everyone, we don't have a just system. More - he is saying that this way of doing things is a paradigm of a just system - "the kingdom of heaven".

But what's really galling is that a JG is promoted by those who favor INCREASED privileges for the cause of so much injustice in the first place - government-privileged banks!

This is not true. First of all, where did Jesus favor increased privileges for banks? Where do the MMTers? Whatever you say that these privileges are, fine - get rid of them. It's not important compared to the JG: the central, most important and powerful recommendation of MMT.

Look at Wray's old blogpost "MMT for Austrians". I am saying just what he did. Have your Austrian or Andersonian system, fine, no problem. "We could do that" (Wray) if it has a JG. If it doesn't have a JG it will be very unjust - quite unworkable for the masses. With the "free banking" involved, it will probably be financially unstable & need to have a JG pool that expands and contracts quickly and greatly as private employment gyrates in an old-fashioned 7 year or so boom/bust cycle.

Identification of a job guarantee with charity seems to be the heart of the problem. The neoclassicals, the mainstream, the banks, oligarchs and corporations and their paid economists have brainwashed people into a very strange pattern of thought. ("Fuddled their minds for years & years" - Keynes)

I mean, suppose you hire somebody to fix your roof. He does a good turn for you - he fixes your roof. You do a good turn for him. You give him money. Where is the "charity"? It is just people cooperating together for the common and individual good in a just way. What is different with a JG or the vineyard? Answer: Nothing.