It’s Wednesday and so only some snippets today. First, a video of a seminar I participated at the other day where we talk about the future of Europe (and the World). Second, some working papers that might be of interest. And finally a music segment. I felt like posting the 1980s song from The Vapors – Turning Japanese – after the Reserve Bank of Australia announced yesterday they were now modelling their monetary policy interventions of the excellent template that has been pioneered by the Bank of Japan. You know get the government to buy all of its debt – then pay itself back – then remit the payments as ‘dividends’ back to itself. Right pocket meet Left pocket. I will analysis the big shift in the RBA’s position tomorrow. And when you listen to the RBA Governor this morning trying to tell Australians that black is white when we all know it is black and they have let the cat out of the bag, you will realise why the whole hysterical show they are putting on is important. But that is tomorrow. And I hated the song anyway....Bill Mitchell – billy blog
A video, papers to be read and a song
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia
6 comments:
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Tom, you asked me somewhere about Lerner, functional finance and MAP etc.
My answer is that he didn't abandon functional finance, which is a very general framework and idea, wider than MMT, sort of. His later plans were things to address the inflation "semi-inflation" which might occur when finance was functional, the region between what he called low full employment and high full employment, the arena of the Phillips Curve. This was appropriate in his era, because the USA was following functional finance, but in the worst and most inflationary way - military Keynesianism, top down spending boosting private investment, welfare programs rather than direct job creation. So the oil crises hit an economy which was fragile with respect to inflation, even if it wasn't happening. (The pre-oil crisis inflation was basically fictional, within the error bars of the measurements.) The Job Guarantee is the most natural and effective tool for this purpose, but there are others. The problem is that he didn't really nail down the anti-inflationary effect of this full employment program. Nobody did until Bill Mitchell, though Lerner came close. (Minsky, Keynes, Ben Graham too.)
However, Mitchell & Wray have both claimed that in later work, Lerner turned away from functional finance and reverted toward budget balancing or sound finance. But they don't give good references, too general, no real quotes. I looked at one late Lerner paper Wray mentioned - but saw no apostasy, nothing that contradicted Lerner's earlier theories.
My sense is that they aren't reading late Lerner correctly. Because I don't think they read the earlier Lerner well enough. In the late 40s/ early 50s, Seymour Harris gave some friendly and mild criticism of Lerner's functional finance budget/debt positions in his Functional Finance & the Federal Budget paper etc. oft quoted by MMTers. Lerner incorporated this into his functional finance in the chapter on the National Debt in his Economics of Employment. But he notes that while the criticism is correct, they are just cavils - he says "the return to sound finance is illusory" - abandoning functional finance because of such small effects - a bigger national debt is very slightly more inflationary and thus might require new taxes - is like "jumping in a lake to avoid a few drops of rain".
I could be wrong, I could have missed some good evidence that Lerner genuinely backslid. But I would put more credence in this if Forstater said it - as he has the careful spirit of a good historian - much more so than any of the other MMTers. But as far as I know, he hasn't.
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P. S. All that being said, I should take a closer look at
(WP 900) L. Randall Wray- Functional Finance_ A Comparison of the Evolution of the Positions of Hyman Minsky & Abba Lerner- Levy (2018) - where Wray does give some evidence - but still decontextualized from his Economics of Employment explanations- of Lerner's later exaggerated budget / inflation fears. Don't have the energy now.
Wray's main point seems to be to say that while they both landed a bit to the "right" of MMT Minsky was actually closer to MMT than Lerner became, after having been completely in accord with it in the 40s 50s he moved more "right". Perhaps. But this paper is probably a response to Mitchell's completely misguided and unprovoked, even absurd attacks on Minsky - following his same shtick about Keynes, who Mitchell says wasn't really an ancestor of MMT - while endlessly quoting him in approval. :-) Yes, Kalecki was great, but be fair to both men, whose works were largely complementary. And Mitchell misreads Kalecki in an ultraleft, vulgar Marxist way, imho. Making out Kalecki's positions to be like a "Marxist" MMT critic like Michael Roberts, opposing postwar full employment policies Kalecki supported in reality. Again something that makes no absolutely sense for Kaleckian MMTer Mitchell to say.
Outside of places where he has direct experience, Australia, the UK, the Euro - Mitchell is imho not a good historian. He decides on a rigid, dogmatic, even ideological and self-contradictory position and then finds and fits evidence to support it. In particular, Mitchell really doesn't understand the USA and its history. A hopefully more objective and detached view from abroad is always welcome, but his take on the USA during the most MMT-relevant era - the FDR era- is quite bad. FDR was never a "deficit terrorist." Not all Mitchell's fault, since not being an American, he doesn't have a unconscious sense of when he is being fed Big Lies and BS. So he accepts at face value, the plague of modern revisionist histories of the FDR era, the overwhelming majority, coming from across the spectrum, right, center and left - which are truly atrocious. The "nostalgia" they "revise" is far more accurate than their "revisions" - at heart, just recycled fibs of the "Roosevelt-haters". The people to really listen to are the MMTers who have made a particular study of that era- Marshall Auerback, Mathew Forstater and Alain Parguez. And nobody else.
That's my Soap Opera Notes. May change tomorrow.
"He decides on a rigid, dogmatic, even ideological and self-contradictory position and then finds and fits evidence to support it. "
Thats the methodology in which these people are trained...
Thanks very much for taking the time to do that, Calgacus. I suspected something like that happened but didn't have the details. Just what I was looking for.
Thats the methodology in which these people are trained...
But that's what you've been doing... every time you write 'checkmate'.
No I don’t I investigate and apply the Accounting science and regulatory mathematics using the public domain reported accounting balances to show how these morons keep creating financial conditions thru monetary and fiscal policy changes that force the depositories to impose their own economically harmful policies on their payments and credit systems in order to comply with regulations...
Then once I show that scientifically, I use the “checkmate!” figure of speech to troll all the Art degree unqualified people out there (and here) who keep thinking all of these repeated economic problems are instead the product ofa vast “neoliberal conspiracy!” because they don’t have the scientific training to understand what is happening properly...
THATS what I’m doing...
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