Jonathan Chait — Republican Harvard Economist Writes Terrible Defense of the One Percent

Gregory Mankiw plays a small but important role in the political ecology: an accomplished Harvard professor who validates Republican economic policies. It’s almost impossible to find empirical support for debt-financed tax cuts, but when George W. Bush proposed them, Mankiw and his Harvard pedigree were there to reassure that they were “fiscally responsible” and would surely lead to higher growth. The failure of these reassurances to come true has not prompted Mankiw to reassess his thinking. That’s because the fundamental basis for his beliefs about such matters has nothing to do with economics. Mankiw believes rich people deserve to keep their money, regardless of economic consequences.

Now, many conservatives share this belief, but since it is unpopular, they instead argue that higher taxes on the rich hurt the non-rich. Mankiw, to his enormous credit, does not conceal his agenda. He lays his agenda on the table in the form of a paper, “Defending the One Percent,” explicating his beliefs. In so doing, Mankiw — perhaps admirably, or at least bravely — ventures completely outside his area of expertise, economics, into moral philosophy. The result is — well, there’s no other way to put it. It’s an embarrassing piece of ignorant tripe.

New York Magazine
Republican Harvard Economist Writes Terrible Defense of the One Percent
Jonathan Chait

Professor Mankiw is at least up front about his conservative rationale: "Some people are better than others" and therefore deserve more. That they have more is sufficient proof that they are better than those that have less. Yeah, he actually uses this as the basis of his argument.

Mark Thoma — 'The Hangover Theory' [Paul Krugman]

Moralizing versus math. Paul Krugman did the math at the time of the Asian crisis and got it right. So why is he resistant to MMT now?

Economist's View

'The Hangover Theory'

Mark Thoma

David Ferguson — Ted Cruz: ‘I don’t trust the Republicans’

Ted Cruz: ‘I don’t trust the Republicans’ (via Raw Story )

On Wednesday afternoon, while speaking on the Senate floor, Tea Party darling and freshman Sen. Ted Cruz (R-TX) declared that he does not trust the Republican leadership to properly handle budget negotiations on the next Congressional showdown regarding the budget ceiling, nor does he trust the Democrats…

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Jim O’Reilly — A hatchet job in the New York Times on Denmark’s welfare state Jim O’Reilly

Jim calls the Grey Lady out for publishing a moralizing neoliberal screed maligning Denmark as bad apple and a bad example for the world. I would go to the NYT site and read it but I no longer patronize paywall sites. The purpose of paywalls is supposedly to make "quality journalism" whereas the reality is that the "news" is propaganda.

Comments on Global Political Economy

A hatchet job in the New York Times on Denmark’s welfare state

Jim O’Reilly

See also The Face of Terror: Nestlé’s Konzernchef Peter Brabeck “Water is not a human right; everyone should be forced to pay for water" at Max Keiser's.

Daniel Little — Moral intuitions as evolutionary modules

People have moral reactions to the situations they observe around themselves -- within the work environment, in the family, on the street, or in international affairs. This is a psychological fact that is prior to moral philosophy. How should we understand this feature of ordinary human consciousness and cognition?

Jonathan Haidt is a moral psychologist who has some fairly original ideas on this subject. His most recent book, The Righteous Mind: Why Good People Are Divided by Politics and Religion, attempts to lay out a theory of moral psychology that puts moral intuition and judgment ahead of conscious moral reasoning, and independent from the content of what we refer to as moral philosophy.

Understanding Society
Moral intuitions as evolutionary modules
Daniel Little | Chancellor, University of Michigan at Dearborn

Ethics as a branch of philosophy is usually understood as moral reasoning. Reasoning is reflection on experience. Socrates: "An unexamined life not is not worth living" (Plato, Apology 38a). Social and political philosophy are closely connected with ethics through the study of action.

Experience is not merely of factual occurrences, based on perception of events "objectively," but also involves subjective appreciation that is bound up in the experience. Understanding is gained from reflection on experience. Knowledge is the confluence of experience and understanding through a process of reasoning that yields conclusions. Wisdom is the ability to use knowledge practically.

Recent investigation in cognitive science, by Antonio Damasio in particular, shows that the reason cannot be divorced from feeling in that they are inextricably conjoined in brain functioning. There are no "facts" that are not subjectively appreciated, although some matters more appreciated than others, such as routines hardly noticed. Moral intuition and aesthetic intuition applies to those matters that are more subjectively appreciated than others.

In The Feeling of What Happens, Damasio laid the foundations of the "enchainment of precedences": the nonconscious neural signaling of an individual organism begets the protoself which permits core selfand core consciousness, which allow for an autobiographical self, which permits extended consciousness. At the end of the chain, extended consciousness permits conscience. [Wikipedia]

Conscience is the basis of moral intuition. This is captured in the creation myth:  God forbids Adam and Eve eating "the fruit of the tree knowledge of good and evil" (Gen. 2:17). When they eat the forbidden fruit, their eyes are opened, and realizing they are naked, they are ashamed (Gen. 3:7). Here in the ancient narrative lies a teaching story that contemporary study of the brain also reveals scientifically. Moral intuition is somatic in addition to mental. In intuition feeling predominates over mind and in reasoning, mind predominates over feeling.

The explains why there are different moral types. People feel differently, and apparently early learning plays a crucial role in this. Those with a more visceral response relate to events more somatically than those accustomed to taking a more reasoned mental approach. 

George Lakoff has observed that conservative morality is more visceral and impassioned than liberal, which is more reasoned and more aloof. This is why conservatives are not swayed by liberal reasoning, and why liberals resist what they consider to be the "raw" reactions of conservatives.

In addition, some people are more empathetic than others, and those with a deficiency of feeling enabling them to mirror others feelings are sociopathic — not so much immoral as amoral. This seems to be the result of both endowment of mirror neurons and conditioning.

However important this somatic factor is, it is not the whole story of morality. But to ignore it as the foundation of morality in biology and evolutionary science is fatal to any moral theorizing.

Daniel Little — Moral Emotions

Why do people act morally? Why do people act altruistically, keep their promises, or act fairly? It is sometimes held that a part of the answer is that people have "moral emotions", and these emotions play a key role in the creation of moral actions.

What is a moral emotion? I'm sure that there are specialists who would offer different definitions of this concept; but I suggest that a moral emotion is a feeling or affect that is responsive to the situation of other living beings. Sympathy, compassion, humor, affection, and respect are all examples of moral emotions; but so are antipathy, rivalry, envy, and racial animosity. This inventory shows that what I'm calling "moral emotions" are not necessarily "moral" -- taking pleasure in the suffering of others is morally unattractive, but falls in the category of a feeling that is responsive to the situation of the other.

There is a related category of emotion that philosophers sometimes refer to as "cognitive emotions." These are feelings that are dependent on possessing certain kinds of beliefs. Feeling grateful is a cognitive emotion; it doesn't make sense to attribute this mental state to someone without also attributing to the person some set of factual beliefs about what has occurred in light of which being grateful makes sense. (Andrew Ortony, Gerald Clore, and Allan Collins provide some theoretical discussion of this topic in The Cognitive Structure of Emotions.)

These two categories do not fully overlap. There are moral emotions that have a cognitive basis. But there are also moral emotions that do not have a cognitive foundation -- for example, the emotional response most people have to a smiling infant. And there are cognitive emotions that do not have a social component -- for example, fear of illness.

It is clear that normal human beings experience these kinds of emotions and feelings. How should we factor them into our theory of action? How do emotions affect behavior? Some emotions seem to have an immediate causal power to create dispositions to specific kinds of action (dispositions that can nonetheless be overridden by higher functions of self-control). An angry person is disposed to lashing out at others. A person experiencing sympathy is disposed to providing aid to people in immediate need. A frightened person is disposed to retreat from the frightening situation. A person experiencing sadness may be inhibited from any kind of action. So emotions have a fairly direct relationship to action....

Understanding Society
Moral Emotions
Daniel Little | Chancellor, University of Michigan at Dearborn

What Daniel Little calls moral emotions play a central role action theory and decision making, hence in political economy, and they are central to politics and policy making. But, curiously, they are excluded from the consideration of rationality in neoclassical economics. Keynes considered them in terms of "animal spirits," for example, but not substantially otherwise.

This is strange in the Adam Smith, the founder of economics, or better, political economy, was a moral theorist, having published The Theory of Moral Sentiments (1759) well before The Wealth of Nations (1776). Karl Marx, too, was more a philosopher than an economist in the contemporary sense, and his work centers on emotion as much as on reason. Marx's concept of alienation, derived from Hegel's master-slave and "unhappy consciousness" analysis, later became a syndrome in contemporary psychology but was forgotten in economics. Hegel had maintained that behavior is contextually determined rather than natural in the sense of law-based, so that it is possible to transcend from one stage of consciousness to another. Marx held that it was possible to transcend the state of alienation and, moreover, that this was the direction of history at present, driven by increasing species-consciousness, that is, awareness of the universality of human nature.

Some economists have called for a more balanced methodological approach. Adolph Lowe called for a melding of economics and sociology in the 1930's in order to give economics on a strong footing in reality instead of being absorbed in stylized modeling. Kenneth Boulding introduced the concept of "psychic capital" and went on to develop the field of evolutionary economics, which attempted to approach social science holistically  Recent advances in cognitive science (Antonio Damasio) are beginning to have an impact, too, and behavioral economics is gaining ground. In fact, Daniel Kahneman was awarded the Nobel in economics enen though he is not an economist. So some progress is being made toward a more comprehensive approach. On the return of emotion to the study of economics, see Mabel Berfezin, "Emotions and the Economy."

George Lakoff — Why Ultra-Conservatives Like the Sequester

President Obama has detailed the vast range of harms that the sequester would bring. They are well-known. And they are not necessary. The president sees the sequester, if it happens, as an enormous self-inflicted wound, inflicted on America by a Republican-dominated House elected by Americans.

But pointing out Republican-caused harms to millions of people -- many of them Republicans -- does not sway the ultra-right. Why? Democratic pundits say that Republicans want to hurt the president, to show government doesn't work by making it not work, and to protect "special interests" from higher taxes. All true. But there is an additional and deeper reason. Ultra-conservatives believe that the sequester is moral, that it is the right thing to do....

They believe that Democracy gives them the liberty to seek their own self-interests by exercising personal responsibility, without having responsibility for anyone else or anyone else having responsibility for them. They take this as a matter of morality. They see the social responsibility to provide for the common good as an immoral imposition on their liberty.

Their moral sense requires that they do all they can to make the government fail in providing for the common good. Their idea of liberty is maximal personal responsibility, which they see as maximal privatization -- and profitization -- of all that we do for each other together, jointly as a unified nation.

They also believe that if people are hurt by government failure, it is their own fault for being "on the take" instead of providing for themselves. People who depend on public provisions should suffer. They should have rely on themselves alone -- learn personal responsibility, just as Romney said in his 47 percent speech. In the long run, they believe, the country will be better off if everyone has to depend on personal responsibility alone.Moreover, ultra-conservatives do not see all the ways in which they, and other ultra-conservatives, rely all day every day on what other Americans have supplied for them. They actually believe that they built it all by themselves.

So for them the sequester is not a "self-inflicted wound." It is justice. The sequester is not merely about protecting "special interests." It is about the good people who pursued their self-interest successfully, got rich, and have acted "morally" in avoiding taxes that pay for public provisions by the government....

They are not merely trying to harm their own constituents just to hurt the president politically. Yes, they think hurting the president politically is moral, and they believe that any constituents they are hurting need to become more personally responsible. They see the sequester as serving that purpose.

In short, the sequester is not just about money and political power for the Republicans in the House. It is mostly about what they see as the right direction for the country: maximal elimination of the public sphere.

The Huffington Post
Why Ultra-Conservatives Like the Sequester
George Lakoff | Richard and Rhoda Goldman Distinguished Professor of Cognitive Science and Linguistics at the University of California at Berkeley

Pretty good description of neoliberalism as an ideology built a moral foundation justifying the economics.

Michael McAuliff and Sabrina Siddiqui — John Boehner Compares Tax Proposals Of White House To Stealing

House Speaker John Boehner (R-Ohio) declared Thursday that seeking more revenue in order to reduce the federal deficit or to replace sequestration's pending budget cuts is tantamount to stealing from Americans.

The Huffington Post
John Boehner Compares Tax Proposals Of White House To Stealing
Michael McAuliff and Sabrina Siddiqui

The Speaker losing it, or just pumping the base?

Nick Wing — Louie Gohmert: Debt Is 'One Of The Most Immoral Things This Country Has Ever Done'

Tea Party Rep. Louie Gohmert (R-Texas) said this week that his generation's contribution to the national debt is "one of the most immoral things" the nation has ever done. Gohmert went on to include debt in a conversation of national tragedies such as slavery.

“Slavery and abortion are the two most horrendous things this country has done but when you think about the immorality of wild, lavish spending on our generation and forcing future generations to do without essentials just so we can live lavishly now, it's pretty immoral," Gohmert said in an interview with Newsmax.

The aside came during a broader defense of "sequestration" cuts, in which Gohmert argued that "people have got to understand that we're serious about stopping the massive load we are putting on our children and their children. It is one of the most immoral things this country has ever done."

The Huffington Post | Politics
Louie Gohmert: Debt Is 'One Of The Most Immoral Things This Country Has Ever Done'
Nick Wing

Ha-Joon Chang — Europe is haunted by the myth of the lazy mob

It suits the wealthy to turn the debate about poverty into a morality tale, but the reality is that inequality is structural

The Guardian | Comment Is Free
Europe is haunted by the myth of the lazy mob
Ha-Joon Chang | Professor of Economics, Cambridge University

More on framing

1. Spending Cuts Spur Growth

2. Only Private-Sector Job Growth Matters

3. Public Employees Are a Problem

4. Education and Training Restore Family-Supporting Wages to Dislocated Workers

5. The “Skills Gap”

6. American Corporate Taxes Are Among the Highest in the World

AlterNet
6 Republican Economic Myths Obama and Dems Must Stop Repeating
Roger Bybee

So we have another gap between what is “true” in the conservative media bubble and the objective facts. In the real world, we spend about $25 per day on the needy. But, according to Fox News, the figure is $168.

AlterNet
How an Astounding New Right-Wing Lie About the Economy Is Born
Joshua Holland | Senior Writer

Randy Wray — Alternative Framing of Money: Coda

Randy concluded his series on reframing "money" yesterday, but has added another post in response to comments and also a post by George Lakoff yesterday, which was linked to here at MNE.

New Economic Perspectives

Alternative Framing of Money: Coda

L. Randall Wray | Professor of Economics, UMKC

Randy called attention to these comments today:

Schofield | December 14, 2012 at 8:26 am

To paraphrase David Sloan Wilson in his article “The New Fable of the Bees” conservatives “demonically strive to widen their slice of the pie while remaining oblivious to the size of the pie.” Wilson calls this the fundamental problem of social life. The principal motive for MMT’s development is the recognition it can make the pie bigger and, therefore, how a society can best make the pie bigger should be a goal of “framing” arguments.
 

The New Fable Of The Bees: Multilevel Selection, Adaptive Societies, And The Concept Of Self Interest

Schofield | December 14, 2012 at 9:07 am

If David Sloan Wilson is implying that conservatives are not open to new ideas about increasing the size of the pie because they are obsessive about increasing their slice of the pie then it follows that they are unlikely to be open to expanding their understanding of a fundamental aspect of money’s nature. They will struggle to understand that money like our DNA coding mechanism is a “conceptual communication system,” that it allows labor to be instructed to use resources to produce goods and services including the social exchange of goods already produced or indeed benefit from the social effects of services already funded (e.g. improved policing). This failure leads to not seeing that a healthy economy requires an optimal of money of money for both active spending and prudent saving. Accordingly the lack of conservatives “openness” has to be framed by progressives as detrimental to advancing an economy just as obsessiveness with part of the pie rather than the whole pie is too.



LRWray | December 14, 2012 at 9:23 am


Schofield: I like the wilson point on the pie–it has always been the conservative approach to “distribution”: a fixed pie so if I get more, you get less. I also like your analogy to DNA–could be something important there for developing the alternative framing.



Schofield | December 14, 2012 at 9:47 am

The phrase “conceptual communication system” for one aspect of money’s utility is a straight lift from the following article:-http://www.toriah.org/articles/abel-2004.pdfIt seemed to fit since I was interested in exploring what we know about any rational argument concerning the origin of cooperation at the molecular and cell level of life. Precious little it would appear. But since money is a social technology that helps us to cooperate with each other to meet our needs then so is DNA coding to help cells survive and meet their objectives. 

Schofield | December 14, 2012 at 10:27 am 

To paraphrase Trevors and Abel in their article referenced about the property of “value” in money relates to the operation of a “linear digital algorithmic program.” So a simply coded program would incorporate the understanding that if too much money is injected into an economy relative to resources availability “value” will tend to fall and vice-versa. Additional coding, for example, could support Steve Keen’s observation about economic performance being related to income and the quantity of increase or decrease in private debt but it obviously also impinges on money’s “value.” A good algorithmic program would obviously help determine the parameters affecting “value” and clearly this relates to Wynne Godley’s life-time’s work on Sectoral Accounting Balances. So money is like DNA it’s subject to algorithmic programming.

George Lakoff on Michigan's Corporate Servitude Law

Language works so that the conservative name "right to work" evokes the conservative political ideology in the brains of those who hear it without wincing. The more an idea is activated in the brain the stronger it gets. Thus, the use of the conservative name strengthens the conservative ideology in the brains of the public.

The press is not being neutral in using the Republican name for the law. Journalists too, in just using the name, are supporting both the Republican framing of the law and conservative ideology. The press is not being balanced -- which is what journalists typically claim to be. Balance would be to use both the names "corporate servitude law" and "right to work law" and to explain the differences in the progressive and conservative understanding of what the law is and does.

Of course, to do so would change a false view of language that journalists too often internalize, namely, that language is neutral. To see that it isn't, just try speaking or writing of "Michigan's corporate servitude law" and listen to conservatives scream bloody murder over a truth that does fit their view of democracy. And listen to them keep screaming because it is important to keep repeating the true name of the law if the public is to understand what the law really does.

The Huffington Post
Michigan's New Corporate Servitude Law: It Takes Away Worker Rights
George Lakoff | Goldman Distinguished Professor of Cognitive Science and Linguistics at the University of California at Berkeley

Randy Wray — An Alternative Meme for Money: Conclusion

The monetary system is a wonderful creation. It allows for individual choice while giving government access to resources needed to allow it work for us to achieve a just society.

The monetary system spurs entrepreneurial initiative. It finances, organizes, and distributes much of the nation’s output. It is one of the primary mechanisms used by government to accomplish the public purpose.

There could be a better way to organize production and distribution. There could be a better way to allocate resources between public and private. There could be a better way to induce the private to serve not only its own interest but also the public interest. But if so, we have not yet seen it—at least not since the end of tribal society, and I’m not sure I want to go back there.

Until that better system comes along, we need a progressive meme for the monetary system we’ve got. Progressives have been in retreat for the past three or four decades. Yes, they’ve won some battles—mostly in the social sphere. They’ve lost almost all economic battles, however. At least some of those losses are due to adoption of the wrong meme for money.

New Economic Perspectives
An Alternative Meme for Money: Conclusion
L. Randall Wray | Professor of Economics, UMKC

Randy Wray — An Alternative Meme For Money, Part 7: Framing Deficits

Deficits and Debt are probably the most terrifying topic that MMT addresses. We need to be careful. We are treading on moral (or religious) grounds. We know that one should not be a debtor (or, a creditor)—most religions tell us so. One who proclaims that deficits and debts are OK is automatically engaged in blasphemy of various sorts, not least of which is a crime against morality. Let’s try to frame the discussion.
When government spends more than it taxes, we not only get the services and infrastructure that we need but we also get to accumulate net financial wealth. We are richer in both real terms and financial terms. Government also offers to pay us interest on that financial wealth if we prefer to hold treasuries rather than HPM.
Government spending greater than taxing should not be called a “deficit”, rather, it is government’s contribution to our saving; government bonds are not “debt”, they are our net financial wealth.
Deficits and debts are bad framing; saving and wealth are good framing.

New Economic Perspectives
An Alternative Meme For Money, Part 7: Framing Deficits
L. Randall Wray | Professor of Economics, UMKC

Randy Wray — An Alternative Meme for Money, Part 6: Alternative Framing on Inflation

Government always spent by notching hazelwood, imprinting clay, stamping coins, chalk on slate, or “running the printing press”. There has never been another alternative. These marks or electronic entries represent government IOUs.

No matter what time period we are talking about, I would have received government payments as “Government Owes Me’s”.
Obviously, government cannot run out of these. Government can “afford” to buy what’s for sale in its own currency.

The question is not about affordability but rather concerns effects on the value of the currency and impacts on the pursuit of private interest.

New Economic Perspectives
An Alternative Meme for Money, Part 6: Alternative Framing on Inflation
L. Randall Wray | Professor of Economics, UMKC

Randy Wray — A Meme For Money, Part 2: The Conservative Framing

Next installment in the series on framing MMT is up. Comment here, there, or both.

New Economic Perspectives
A Meme For Money, Part 2: The Conservative Framing
L. Randall Wray | Professor of Economics, UMKC

We need a new meme [frame] for money.

That meme would emphasize the social, not the individual. It would focus on the positive role played by the state not only in the creation and evolution of money, but also in ensuring social control over money. It would explain how money helps to promote a positive relation between citizens and the state, simultaneously promoting shared values such as liberty, democracy, and responsibility.

The conservative view emphasizes individual freedom. What's not to like about that. Opposing it is like opposing mom and apple pie. The challenge is to show that it is insufficient as an ordering principle of society which is what government provides. Conservatives are just as committed to "law and order" as they are to "liberty." In fact, when push come to shove, literally, they prefer law and order. The ongoing undermining of constitutional liberties to "fight terrorism" is a good example of this preference.

As George Lakoff observes some people are uni-conceptual but most are bi-conceptual. Uni-conceptuals have a rigid and doctrinaire conceptual framework that is defined by norms.

Lakoff posits that those who are uni-conceptional define the political extremes of right and left, while those who are bi-conceptual define the moderate center right and center left, as well as voters that self-described as independents.

Uni-conceptual people are unlikely to be converted, but they are not dominant in the voter pool on either right or left. Each side needs to capture the center, the bi-conceptuals.

Bi- (and I would say multi) conceptuals hold values belonging to both extremes, sometimes at once — and they are not always clear on which trumps the other. They can be convinced with the right narrative.

Opposing freedom with some other value is a tough sell without resorting to fear. That is not a good choice. Rather, a more nuanced approach may be more suitable, that is, showing how key values are complementary rather than antagonistic.

Most people are not anarchists. They are very suspect of arguments that reduce government beyond a certain point because they know that the likely result is disorder rather than greater freedom. It is only a small percentage of the population that thinks arming individuals is the way to increase freedom and order simultaneously and automatically.

Similarly, most people are aware that the challenge since the Enlightenment and its political manifestation in the American and then French Revolutions has been to harmonize individual freedom, social justice and fairness, and solidarity in community — Liberté, Egalité, et Fraternité.

It is not a big step from there to create a social and political narrative based on both freedom and order under the rule of law in a liberal democracy as "the American way," as well the mosts successful social and political "experiment" that humanity has conducted on a vast scale. Most modern people already buy into this in one way or another.

The challenge then becomes creating an economic narrative that not only fits this framework but also is capable of delivering on its promise of distributed prosperity through an economic system that is the material life-support system and means of progress of a free people who are safe and secure in an ordered society that is dedicated to the common good and general welfare.

The basis of this narrative is in the preamble to the U. S. Constitution:

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence [sic], promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

It is amplified in the conclusion of Abraham Lincoln's Gettysburg Address, where he speaks of "government of the people, by the people and for the people."

Government is about management with a view to public purpose. Management is about efficiency and effectiveness. According to Peter F. Drucker, "efficiency is doing things right, and effectiveness is doing the right things." The commonly understood goal of macroeconomic aspiration is the harmony of growth, employment, and price stability. 

Most economically significant political issues concern these goals and how best to achieve them. MMT has an answer that resolves this trifecta harmoniously, showing that the issue is real resources rather than affordability. That should be the basis of the narrative.

"If we can, why not. If not now, when?"

Randy Wray — A Meme for Money, Part 1: Introduction

I assume that most people here are here because they are interested in MMT and therefore keep up on the major MMT blogs, so I only link to posts on those in cases that I deem must-reads. After completing his latest book, Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems, Randy Wray is beginning a new series on framing money that qualifies as a must-read. Comment here or there. You are welcome to post your comment at both.

New Economic Perspectives
A Meme for Money, Part 1: Introduction
L. Randall Wray | Professor of Economics, UMKC

Of course, I am very pleased with this, since I have been harping on framing for a long time and citing cognitive science about it. As Joe Firestone and others have, too. We need a compelling narrative to deliver the compelling reasoning.

Nicholas Kaldor on exorcising the demon of monetarism

Ramanan put up a must-read Kaldor quote of which the festival of Diwali reminded him. The festival of Diwali celebrates the victory of good over evil, symbolized by the gods vanquishing the demons.

Why are these two things important for our understanding. First, we are dealing with a fundamental cognitive mistake, indeed, a mathematical one. Secondly, this mistake is not one that highly intelligent people would be likely to make analytically. Moreover, they exhibit strong resistance to analytical counter-argument, even though the math is not only clear but simple, indeed, elementary. This sends an important signal.

The signal is that we are not dealing with reason alone here, and so rational argument is not likely to change either minds or hearts. In fact, recent psychological research reveals that when indisputable fact is marshaled to counter such arguments, those holding the position tend to double down instead of retreating — even the most intelligent measured by conventional standards. Clearly something other than reason is involved.

Kaldor apparently realized this judging from his metaphor. While the ancient sages were cognitively advanced, they realized that communicate with the people of their eras they needed to speak in context. So they used metaphors like battles between gods and demons in their teaching stories. These stories were heard by children who took them literally but the object of such storytelling was to plant seeds that would later mature into deeper understanding. The stories of heavenly battles were meant to symbolize the inner struggle of all between the "angels of their better nature" and the forces of temptation.

Carl Jung was probably the first Western scientist to approach the ancient teaching stories analytically. He realized that they were actually about the tension between conscious cognitive-volitional-affective operations and unconscious ones. Can we see the dialectic going on in the social, political, and economic arena among ideologies in this light. I think so.

Therefore what is needed is an approach that is not only cognitive but one that addresses all levels. For example, arguments involving debt tend to be moralistic and rhetorical more than factual or logical. In fact, when monetary economics is first explained to them, many people recoil in horror at the notion that public debt is actually "good" and, indeed, usually necessary.

We have talked quite a bit about framing counter-arguments previously. I strongly suggest reading The Debunking Handbook, suggested in the comments by modernmoney. It's a short and easy read.

I would also encouraging looking at cognitive bias and informal fallacy. Here is list of cognitive biases. Here and here are lists of informal fallacies.

John Harvey — Of Course the Government Can Create Jobs!

A recurring theme in the Presidential Debates has been the role of the government in the economy. There are obviously many complex issues involved and a number of tradeoffs and caveats exist with any policy. That said, however, the assertion that the government cannot create jobs is ridiculous. It is a function of a biased definition of “job” designed to decide the question even before it has been asked....

But, those who say that the government cannot create employment are adding another element to the definition. To them, a job is any routine activity for which we earn income paid by an entity required to earn a profit.... 

Why would someone would embrace such a questionable characterization? Because their true goal isn’t to generate a scientific understanding of the manner in which the macroeconomy operates, but to make a moral statement.

Specifically, their contention is that only those routine activities financed by profit are truly of value. Everything the government does is unnecessary because if people really wanted it, they would have bought it in the private sector: that which is useful is profitable....

It is not surprising that those who espouse this view are almost always in the private sector themselves. It says, “I deserve my income because I work hard creating something of value. Meanwhile, government employees are just handed a portion of my salary for doing something no one really wants. Therefore, not only am I morally superior, but my taxes should be cut!” It’s a very convenient philosophy, but it’s not economic analysis.

Forbes | Pragmatic Economist
Of Course the Government Can Create Jobs!
John T. Harvey | Professor of Economics, Texas Christian University