An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
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Monday, February 20, 2012
Progressives, who are you going to believe, Matt Yglesias or Jamie Galbraith?
Is the inflation of the 1970s a myth? I don't think it was, but something Dylan Matthews' excellent overview of Modern Monetary Theory illustrates is that some people think it was. That to me is a mistake, and people should try to separate the merits of heterodox macroeconomic theory (which I think are considerable) from a handful incidental political commitments that its adherents have. The core point of MMT is that if you have a freely floating fiat currency then the sovereign can't "run out of money" and the point of taxes is to regulate demand not to finance government activities. But even though this is a "heterodox" view, I think few mainstream people would actually deny it. Instead they think that talking in these terms will lead to dangerous inflation. I think that fear is overblown, but not as overblown as Jamie Galbraith thinks it is....
Read it at Slate | Money Box
Inflation Denialism
By Matthew Yglesias
(h/t Ben in the comments)
Who are you going to believe, Matt Yglesias or Jamie Galbraith? Maybe Matt should have taken counsel and consulted with Jamie before making a fool of himself.
Why are some many progressives clueless about issues that are vital to advancing their interests?
Matt Yglesias born May 18, 1981
ReplyDeleteAge between 1972 - 1980 ----?????
James Kenneth Galbraith (born January 29, 1952)
Age between 1972 - 1980 ---- 20 - 28 and in grad school doing research
Tom,
ReplyDeleteThe title of his post "Inflation Denialism" is a real shot at J Galbraith...
I wonder if someone cant set up some sort of "Progressive Summit" in DC or NY and get everyone there and hash all of this out face to face? I think it may be the right time for that...
Resp,
Good god Clonal now youre making me feel REEEALY OLD! Thanks a lot! ;)
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ReplyDeleteA common fallacy that many people inadvertently subscribe to is that the years BEFORE they are born are ANCIENT HISTORY when nobody other than a few famous people knew anything! And of course, the experience of older people still alive has NOTHING in common to their own.
ReplyDeleteAKA "The Arrogance of Youth"
Uhm, the economist who is *not* coasting on his dad's name?
ReplyDeleteYglesias was a supporter of the invasion of Iraq. I don't know when he became a progressive but it was recent. His opinion is worthless.
ReplyDeletemarris: Uhm, the economist who is *not* coasting on his dad's name?
ReplyDeleteI would not say that Jamie is coasting. He is a well-respected economist in his own right, even though he got a head start due to his famous father. Anyway, he has forgotten more about economics than Yglesias knows.
For example, Yglesias is looking at one factor, unit labor cost. As a good progressive, he should know that periods of increasing labor cost are periods in which labor is successfully able to negotiate greater distribution of profit share to labor than during period of low labor cost.
What happens then is that business is not satisfied with profit-sharing and seeks to maintain its desired profit margin by increasing prices. It is not actually the increasing cost of labor that results in inflation but rather business trying to stay ahead of workers as they demand to be cut in to gains in productivity.
If Yglesias doesn't see this, he needs to turn in his progressive card and admit he has neoliberal tendencies.
Just as a follow up on my youth comment, I would say that when I was 30, I thought I knew a lot more than I really did, and was a lot less willing to learn than I am now.
ReplyDeleteWhy are some many progressives clueless about issues that are vital to advancing their interests?
ReplyDeleteGreat question. I don't know the answer to it. I do know that mainstream democrats have embraced deficit phobia since Mondale beat Reagan by running against the deficit. (Hah.) I used to spend a lot more time on "progressive" sites figuring that's where the smart people were who had solutions. They don't. And just as pro-war progressives offer "smarter, cleaner" wars, so anti-deficit progs offer sugar coated deficit reduction.
Yglesias has learned at a very young age that you can be considered very smart by all the "serious people" if you can reliably turn out nuanced columns ostensibly displaying range and depth on controversial issues and yet always finding a way to come down the middle by the end of it.
David, very well said. You have hit the nail on the head. I would put Kevin Drum and James Kwak in the same category, people who seem pensive and nuanced, but really aren't saying anything terribly radical or unconventional.
ReplyDeleteI don't approve of age-ism in any shape or form.
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