Well, this is where we differ. You guys see no need for unemployment. I do. I think it serves an incredibly important psychological component to any healthy economy. I’ve feared for my job and been unemployed. Those moments shaped who I am and what I’ve become. They were invaluable in retrospect. If I’d been able to apply for a JG job I might not be half the man I am today. Maybe it’s just personal entrepreneurial experience speaking here, but I know what it means to hunt and kill for ones dinner. Very little, aside from great parenting and education, was handed to me in life. My psychological development through having to earn things has been a building block that no govt program can ever provide. Ever.
Honestly, I find it shocking how one could argue that the JG could be implemented “for free”. There’s a certain level of common sense that seems to be missing from the conversation here. I wish empire building were as easy as govt job programs. There are potentially catastrophic praxeological and societal impacts from such programs. The arguments that the JG would not substantially impact the way our society uses resources, competes, thinks, etc is beyond wrong and doesn’t come close to passing simple logic.Pragmatic Capitalism
Interesting. That's where my debate with some Austrians ended, when they said they saw no priority in making full employment and price stability an economic goal.
So I guess we now officially have different strains of MMT based on different criteria of effectiveness. I have often said that philosophically there is no positive economics in that the criteria of economics are exogenous to the discipline and are essentially moral, i.e., normative and a value-laden.
In the final analysis, economic argumentation ends in moralizing, and people with different values, norms, and moral principles will have different approaches to life, as we see vividly illustrated in the current political campaign, both between parties and intra-party.
I remember when I was first a graduate student in philosophy I asked one of the profs why they never discussed philosophy and debated with each other, since I thought that would be a good exercise for students to observe. The answer I got was short and to the point. The prof said that they had already done that and had argued each other back to incompatible fundamental principles, and then agreed to disagree. After that, it was all just exchanging pleasantries.
He's a right Lib Tom...
ReplyDeleteMaybe Cullen is the MMT liaison in the MMT-Austrian debate with John Carney. Maybe Edward Harrison would sign on, too. With Warren along they couldn't go far wrong. :)
ReplyDeleteWell, this is where we differ. You guys see no need for unemployment. I do. I think it serves an incredibly important psychological component to any healthy economy. I’ve feared for my job and been unemployed. Those moments shaped who I am and what I’ve become.
ReplyDeleteA lot of combat veterans say similar things and yet hiring snipers to start shooting at random workers would be, I believe, a bad idea.
:o)
So now we know how Cullen Roche makes sense of the world and MMT has zip to do with it.
ReplyDeleteI keep coming back to micro vs. macro.
ReplyDeleteIts great that that all worked out for Cullen but it doesn't work out for some others - so ultimately becomes a fallacy of composition.
The micro argument is a powerful political argument but a poor economic one.
How do I know, I've had the opposite experience to Cullen and still am to an extent but workfare has helped but can't take me to the next level which I'm ready for but nor can workfare create jobs and nor can anyone else if they don't have the money for it.
Cullen seems to be saying that UE or fear of UE is psychologically beneficial. At least that is one of the arguments put forth.
ReplyDeleteAs for me, I've blindly trusted the MMT mantra that involuntary UE is detrimental in many ways. I'll keep on doing so for now - no time to look into primary research at this point.
I think C also argues that full employment, FE, is OK but it should not be achieved via JG. Rather, there should be primary goal of "full productivity", after which FE and price stability PS will fix itself.. to reasonable levels?
So the economy would tend to full or reasonable employment levels if only running at "full productivity"? This sounds novel - would be really interesting to see some coherent argumentation.
Cullen has also said that his version of MMT is apolitical, while JG proponents are mixing in ideology.
That seems unfair to me. As I see it, the JG proposal follows *logically* from the bufferstock concept, which in turn does not seem too ideological to me. Also, MMT states that unemployment due to the economy being overtaxed.. and that the social costs of UE are very high.
OK, maybe it's a bit ideological here and there? (To me it's mostly just logical.) But to flat out prefer an "unemployment program" surely must be equally ideological then?
HH,
ReplyDeleteYes it is completely ideological.
I've narrowed it down to Libertarians of the Right in my view....
Very contemptible human beings... vile... they zealously seek to separate human beings from their means of subsistence.... very, very dark.
Resp,
"As for me, I've blindly trusted the MMT mantra that involuntary UE is detrimental in many ways."
ReplyDeleteHugo, there is no doubt whatsoever about that. The relevant literature in psychology, sociology and related disciplines all clearly supports the view of the academic MMTers.
Incidentally, this is why, in considering basic income guarantee proposals, a concern becomes how to enable a transition in which those whose self-esteem and social connections primarily spring from the current work relation (many people!) are not adversely affected. (That is one reason I suggested a JIG - combined 'job or income guarantee' - rather than a BIG.)
After that, it was all just exchanging pleasantries.
ReplyDeleteTom great analysis here. And frankly isn't this exactly where we find Congress today? The revelation becomes staggering to think that we all know the other points of view, we just don't agree with them without any evidence of EXPERIENCING them yet. In other words people against a JG refuse to even try it to "see what happens" so they can verify their "feelings" about it. Which only leads us back to the normative levels (without evidence) and "pleasantries." It's a vicious cycle that will never resolve itself until new EXPERIMENTS are made, observed, and analyzed accordingly.
I am sure that both sides of MMT would study empirically the results of the JG...however the real question underneath all of this...is what other "normative" beliefs lie waiting?
I agree with Sennexx (no surprise) about micro versus macro. Cullen's story is inspiring...but it is also not very quantifiable. It's the equivalent of throwing the boy in the pool to "learn" how to swim. Are there better ways to do that? Yes of course.
Here's another interesting line on Cullen's argument....if he was on UE...then how truly "hard" was it for him? He did receive "support" and even still was able to be so entrepreneurial. Therefore wouldn't it be logical to conclude that his entrepreneurial spirit also would not be "hampered down" by a JG just as it wasn't hampered down by UE benefits? In other words, people aren't "forced" into the JG...if they want to "challenge" themselves and go "all-in" survival mode...they can do that. But those that didn't get that "good parenting and free education" which he seems to gloss over so quickly...may not have the leverage, resources, and means to truly rise up from the proverbial social ashes.
None-the-less I think it's wonderful to see these discussions arise and MMT show more of its "true colors." Really is anything new under the sun?!?!
Just to counter the point made by Cullen's anecdote with an anecdote of my own - representing I feel the majority of people rather than the small number of self-motivated ones that seem to drive debate in their own image.
ReplyDeleteDuring this recession I've seen men lose their jobs as a result of factory closures. These people are very ordinary weekly paid factory workers.
The one I know best, who came across as a generally happy man, tried very hard to get another job but there were none going. Very quickly his self-esteem went and he started drinking too much, gambling too much and becoming abusive around his family. The family was on the brink of break up - including two young children.
Then, fortunately, he was able to secure another position with the help of the employment service - out of the 95 bones available to the 100 dogs he got one. A bit further away but a job nonetheless.
Practically overnight the happy go lucky man returned, and the family were able to return rapidly to normality.
The vast majority of people are not self-directed and self-motivated. They were trained by the school systems to accept orders and toe the line.
For every one person unemployment motivates to climb to the top of the heap, how many are trodden down by those steps?
The problem with debates between parties of different ideological persuasions is that the issue is not facts but values. Ideological commitment determines what the "facts" are. Just look at the debates over the causes of the financial crisis. One side blames the government and fits the facts to its case. The other side blames the financial institutions and fits the facts to its case. When ideological norms shape the putative facts differently, what could the criteria be for evaluating truth?
ReplyDeleteThe fact is that the right considers production the chief purpose of the economy and price stability as the conservator of financial wealth. Employment is not a concern or a very secondary concern. This is why monetarists have no problem with using unemployment as a buffer against inflation and a way of controlling the cost of production, since wages are chief cost. They hold that prosperity is equatable with growth regardless of distributive effects. They reject the concept of public goods, the general welfare, and even that there is such thing as society, which this see as an aggregation of individuals independently of their social relationships. They go so far as to say that any other conception of capitalism is not a capitalism at all but socialism. They reject things like the JG as "socialistic." This, of course, is a value-judgment.
The left, on the other hand, holds pretty much opposite views as norms in its ideology and value system.
Where is the basis for debate here unless someone is willing to compromise on principles?
Carrying on from what Tom said, I note Cullen said that Full Production leads to Full Employment and Price Stability. FP=FE+PS in his book.
ReplyDeleteIn mine FE=FP+PS
= meaning leads to - if there is an actual symbol for "leads to" please let me know.
I think there's evidence for the latter not the former.
I'd also like to note for the record that Cullen is a great guy and I have nothing but love and respect for him and his work and his site and all that he's definitely done for MMT and everything.
ReplyDeleteThese "differences" are really great and in fact help to prove that we're not brainwashed....we are thinking and know wtf we are talking about. These "schisms" may in fact lead to even greater popularity with MMT.
Based on the equations that Sennexx shares, it appears that Cullen does value FE, he just sees a different way of achieving it. That is a very different statement than being against an ELR. If FE could be achieved without an ELR, I'm for it. Perhaps an ELR isn't the best way?
I seem to think that FP = FE, so that if we truly were "fully productive" we'd have FE. Therefore we have never been fully productive since we've never had FE. Therefore, we need to do something different. The question becomes when there's slack who picks it up and how do they pick it up?
If Cullen or anyone else knows of some other way to reach FP (aka FE) then let's hear it, check it out and see if it works! All I've heard is better investment...and that could very well work...except what's the plan? What are the details? ELR has a plan...what is the Investment plan?
Mario,
ReplyDelete"These "differences" are really great and in fact help to prove that we're not brainwashed...we are thinking and know wtf we are talking about."
Didnt think of that angle... thanks bud.
Resp,
I think mysteriously Cullen hasn't internalized that fot the govt money is free and issuing IOUs carries no future burden. In this sense solving the unemployment problem is "free" - the agent of the society (the govt) simply has to issue IOUs and nobody will carry the burden to produce real goods to pay off these "debts".
ReplyDeleteWhereas I don't believe Full Production can lead to Full Employment as you could argue that is what we have now which in turn is what has led us to Crony-Capitalism.
ReplyDeleteThe differences in these "schisms" are thin but they ultimately lead to very different conclusions.
Those of us on the right consider the Government guarantee of employment a left-wing fantasy.
ReplyDeleteWe also consider putting more Federal power over the common man's lives is living in LA LA land and must be fought to the bitter end.
Also, many of us on the right understand and agree with the basics of MMT but we just refuse to countenance putting the government in charge of anything.
Yes, I'm sure there is plenty of literature to back up any point you want to dream up. But it will never get anyone on my side of the aisle to take you seriously.
And, as I've seen on Cullen's site and several others , anyone who disagrees is voted of the island.
So, is there a reason MMT is going down this dead end?
Or is it too much free time on our hands?
bosscauser. no one owns the rights to the name MMT, and it seems it is now in the public domain with ambiguous meaning. In the eyes of the early developers and the economists that joined them later, there is a clear idea of MMT as a revolutionary macro paradigm.
ReplyDeleteMost people that that are interested in "MMT" aren't macro folks and probably haven't read the literature, even if they could understand it.
So there is a a very simplified notion or notions or MMT out there that don't reflect the body of MMT literature, which constitutes the state of the art in MMT.
The developers and other economists have said that anyone is free to use aspects of their work as they wish. I don't think that they even object to anyone calling it MMT. But they make clear that what they consider MMT is set forth in the professional literature that constitutes MMT the way they use the term, and concerning which they all agree.