Thursday, March 8, 2012
Cullen Roche — On Playing Politics…
Cullen Roche has a post up explaining how MMR is apolitical and simply an operational description that makes a variety of policy options possible.
I am posting it here, since it addresses relevant issues, and several regular commenters here who are no longer welcome over there may have something to add to the discussion.
Read it at Modern Monetary Theory
On Playing Politics…
by Cullen Roche
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63 comments:
"Monetary Reality states that full employment and price stability take a back seat to full productivity. Therefore I support across the board tax cuts, including the wealthy. These are apolitcal statements because I support gay marriage."
That's the basic premise, and honestly, I've never even seen anyone attempt anything even close to it. Even the worst of the lot usually own their own politics.
(Popcorn).
I think the time has come to write about things other than Cullen's views about being non-political. A lot of people are writing about MMT, and they need criticism and a lot of teaching, and they have a lot more reach than Cullen and his team members. So our priority should be exchanging with them, not driving traffic to an MMR site that isn't even a playing field for us.
I think all that needs to be said about MMR that MMTers need to say has already been said. Now let's talk about important things.
Trying to pretend to do economics without politics is a political position.
The sole reason for doing it is to take the bits of MMT out of the framework and insert them into the status quo - for the benefit of a particular cohort of people.
And therefore the exclusion of others.
The political position is the propagation of the status quo - just with more profit for the capital sector.
"I think all that needs to be said about MMR that MMTers need to say has already been said."
Agree with that, and if they try and come in all you need to do is call them out and ask for their solution to the problem of effective demand.
Which as we all know is the same as the current system - ignore it and hope it doesn't bother anybody with money.
I agree with Letsgetitdone, It's time to move on. Just like the market monetarists and IS LM guys are never going to change their mind.
I could understand if they had something meaningful to say.
I read Cullen's silly comments the other day how government is not a money monopolist because most credit money gets created by private banks and MMTers are dead wrong when they say that government is the monopoly issuer of money. There is no point aruing with a guy who really doesn't have arguments.
When MMr has a clear proposition and papers to back it up it may be reasonable to give it an other chance.
Meanwhile I haven't seen any meaningful contribution other than the failed savings/investment discussion which did not get anywhere. Other than that it's a rant about how different they are from MMT and how apolitical they are (not).
Obviously CR does not know what is political and what isn't, his whole position is political! The government shouldn't get into the business of creating jobs and I want tax cuts for everyone, including the rich, such increasing deficits & probably inflation. If that's not political, it's the understatement of the year.
Random thoughts about usage of english language by Cullen.
I'm trying to understand which fallacy he is committing?
Psychologist's Fallacy. Presupposes the objectivity of his own argument.
False Association. Falsely argues that MMR is apolitical. Therefore has the positive attributes of being apolitical.
And if we can go into this with an open mind and attempt to understand the system for what it is AND NOT WHAT WE WANT IT TO BE then we will ultimately be able to make better informed decisions as a result.
And if we can go into this with an open mind...
Is an Argumentum ad populum and appeal to motive. This constructs the presumption that all people with open minds will do the following.....
... for what it is AND NOT WHAT WE WANT IT TO BE....
Refering to the object in question(monetary system), Cullen is impling that MMT is currently centred around some non-empirical vision, and therefore is not based on what it is.
Some readers will associate MMR as describing reality. This is achieved by the sequence "for what it is", which is a Naturalistic fallacy? or Moralistic fallacy? Associating MMR with what nature is. Conversely, some readers will equate MMT as what reality 'ought' to represent, rather than what reality 'is'.
The two parts taken together then the following can be said: Given (1)[Community progresses with open-mind] then (2)[Understanding process will describe reality]. This is another fallacy, Illicit Negative? or Fallacy of the Single Cause? That the attitude of having an 'open-mind' caused the process to describe reality. Which is a 'causal oversimplification', and/or 'irrelevant causation', and/or 'unproven causation'.
I would go further and say that it is an irrelevant causation. As an understanding of reality implies an understanding process which is most likely to include a thoughtful mind. The question is if the open-mind is a component of the thoughtful-mind.
Consequently, if a MMR supporter will conclude that MMR is of open-mind, as they believe that MMR describes reality. Conversely, they may conclude that MMT is false and is of unopen mind, if they believe logic used by Cullen.
The fallacies used in this article presuppose the reader to following ongoing Saga. This implies that the intend audience is new MMR readers, and fence sitters.
Words. All arguments are false.
I just wish he wouldn't continuously misrepresent and denigrate the work and ideas of others.
If Cullen just stopped making up nonsense about MMT then no one would get mad at him.
He seems to find it difficult to present his own ideas without simultaneously putting forward some sort of insulting cartoonish caricature of MMT.
It's as if he has to make up little stories about MMT in order for his own views to have any sort of coherent meaning.
He also has these two people called FDO15 and LVG constantly crawling around him and bad-mouthing anything MMT (whilst pretending to be on Cullen's side). I suspect that they're really austrians (or something similar) who are simply trying to stir up shit and coax Cullen further towards their position. It's quite creepy to watch.
Hi folks.
Me and couple of my friends are starting a new monetary movement. It is derivative of two monetary theories, MMT and MMR.
In what aspects do we differ?
Well, we are talking about reality and not how things should be or could be, but how they really are!
The reality is, vast majority of people don't understand how the monetary system operates. There is never going to be a time when people understand that government deficit spending is adding money to the system. So I am talking about reality. These two groups are dreaming. The reality is, bankers lobby will always prevail. Hey, that is reality, that is how It is, we are not dreamers. We are totally apolitical unlike the previously mentioned monetary dreamers.
Considering all this, we now offer prescriptions. Government cannot deficit spend to fix the economy, that is not politically acceptable. This is reality and we don't daydream.
On a more coherent note, I second calls for MMTers to focus on more 'important' things rather than trying to drawn into repetitive debates over the differences between MMT and MMR.
Just my opinion, but I do agree with MMR over the inadequate explanation that taxes drive money and state theory of money. But these are relatively minor.
From an arguing perspective MMT is alot easier to argue vs MMR. WRT J.G MMT should be able to defend it based on the buffer stock analogy that Warren uses. It is partially incomplete, as the buffer-stock must be kept at a certain level to perform its shock-absorbing purpose. This has not been identified or discussed yet.
However, arguments based on morality -- e.g. that everyone is entitled to employment, everyone should feel useful, etc -- will eventually fail. Antagonists in some way or another argue that such systems are a dead-weight loss. Once the argument is reduced to this, then it becomes an opinionated argument over which action results in the most common good; the benefits of the J.G. Vs the benefits of removing the J.G. We are seeing the beginning of this with MMT vs MMR.
Given the current political environment it would be easier to appeal to the common benefits of the J.G. However, over-time I'm certain that such arguments will be reduced to common-good vs common-good. A more rigorous, and perhaps theoretical basis is needed.
Failure to move away from this debate between MMT and MMR, and towards describing a theoretical and empirical basis for the J.G will have detrimental consequences. We are already seeing this with MMR, they are providing theoretical or emotive reasoning to support their positions. For the veteran MMTer this may appear as a benign threat based on the belief the MMT has strong empirical foundations. Or more generally, that the truth will shine through. I'm not so optimistic, I would argue that throughout history, truth has been obscured by prevailing interests.
In some respects MMR has the upper hand on emotive terrain. Although they have little if any empirical basis, their message resonates with some people. If people are unable to distinguish between MMT and MMR, then people may be emotionally persuaded to the MMR perspective. At the moment there are key differences, but MMR supports the status quo more strongly than MMT. Therefore, resources are more likely to flow towards MMR if the MM- family gains traction. Expect inadequate comparisons between MMR and MMT when this occurs.
Tactically, this means MMT will be forced to move into the 'emotive/theoretical terrain'. The manner in which it does this will determine which sibling is best received. I encourage veteran MMTers to promote theoretical explanations for the J.G. Turn this into a competitive space. I think this is essential.
:)
The other day Cullen was arguing that banks act as some sort of beneficial check on the power of government. You've got to be desperate to start making claims like that.
Hehe, funny the last anonymous, the sad part is I agree to a point.
Also there is some stuff with some policy making using MMT that would just support the status quo. Sometimes I wonder if the liquidationist way is better as it at least would shake society more.
I mean, ok, we "fix" the economy a bit so banks can keep going looting it and gradually destroying middle class. Everyone has a job but everyone is poorer each day, with less purchasing power and we have just saved the system using MMT principles. Then what?
Using MMT policies can be a great tool for the establishment, look at China. And in the end we create a bigger disaster that will implode anyway when people can't take it any more. Playing devil advocate a bit here.
That's the kind of odd partial view of MMT that Cullen is so good at. I don't remember reading anywhere in the literature that China is a model to be aimed for.
Mosler argues that having private banks create credit allows the market to price risk, and that this is a good thing under the right regulatory conditions. This is very different to implying that power in the hands of banking plutocrats is a beneficial check on the power of 'Big Government'. That's just Koch Bros talk.
(By last anon I mean the one @6:46AM.)
Shaun I think there is a good pragmatic backup for JG: if there is spare capacity and underutilization of productive resources there is no reason to have people unemployed.
If the private sector fails to use all the potential because there is insufficient cash flow at the household sector and disposable income then the government can and should provide enough demand for it to pick up. If after that there still is spare capacity and involuntary unemployment, then the government can help push the job market creating demand for jobs.
The governments already are fixing prices at the economy and distorting the market, owning the equivalent of 40% world GDP in assets (using central banks). that's done with the sole purpose of 'systemic stability' so why is unemployemnt not 'systemic unstable'.
Then we move to the next issue: what is an acceptable rate of inflation (if any!) and what do we do about real growth, income, there is spare capacity for real? how productive is the economy? etc. So we get back to the basics of REAL ECONOMY.
Which is the only real issue here (the others are manufactured by the status quo and ideology). Should we just accept NAIRU to control inflation? No, then why? There is plenty of literature (Bill Mitchell I think has centred a lot around this whole issue). What if there is no growth? How do we tackle falling rates of profits? How do we tackle excessive saving (hoarding) and skewed income distribution? In the end: how do we make the system stable no matter what and where people does get the best possible outcome? Capitalism (or crony capitalism) right now is a zero sum game when there is no growth, and all this is the fundamental problem which derives in the problems of employment, inflation, growth, etc.
Until all that is tackled MMT is just an other incomplete theory (and I aknowledge that system closure is IMPOSSIBLE metaphysically speaking in our current universe, but still the explanation should be as complete as it could be).
I think it would be very useful for someone to do a line by line critique of Roche's 'About MMR' article.
http://monetaryrealism.com/sample-page/
It's typical misleading CR nonsense and someone really neeeds to demonstrate to him what the difference between an economist and a blogger actually is. CR seems to be getting the two confused.
Anon,
But that's the point of the whole discussion (also with Carney et al.): "what if", "what if", "what if".
The only reason against JG for example is "what if...": the government malinvest it, bids on resources which the private sector would better allocate, creates a malicious incentive system, promotes corporate welfare abusing the JG, etc. etc. etc.
At the end is all about political position & what you want. And this discussion is unavoidable, you have to face it, and if possible back up your position with empirical data to debunk others positions, practical operating procedures, public control measures etc. MMT must be ready to engage at the public level on all this issues, otherwise it just an other pretty theory on paper, reaganeates and tatcherites will come at you with a load of rants and claims about how destructive all these policies are.
Shaun Hingston:
The mistake so many have made with this whole issue is to confuse the debates on blogs with serious academic discussion.
MMT has thirty plus years of research and publications behind it and is founded on the ideas and arguments of generations of economists. MMR is the creation of three bloggers who've read bits and pieces of that literature. The difference couldn't be more stark.
Then we move to the next issue: what is an acceptable rate of inflation (if any!) and what do we do about real growth, income, there is spare capacity for real? how productive is the economy? etc. So we get back to the basics of REAL ECONOMY.
This is where I see the 'battle' being fought. Antagonists will conjure up some reason against the J.G within this 'area' you have outlined. The stuff you said prior is assumed, and I agree completely.
But based on unions being broken and privatization during the 80s and 70s, I think this shows how popular opinion is susceptible to false arguments. Particularly, how emotional/theoretical arguments can have a strong effect.
MMT must move into this terrain! I think the J.G would be a good 'vehicle' for promoting this. A certain 'ideological' distance could be created between traditional MMT and the schools of theoretical thought that attempt to create a theoretical basis for the J.G.
The process itself would be recognized and supported by traditional MMTers.
The mistake so many have made with this whole issue is to confuse the debates on blogs with serious academic discussion.
I agree its a mistake, but MMTers need to recognize the potential threat and possible sequestering of popular support that these 'alternatives' pose.
MMTers either wait and hope for readers to realize the fallacies of such debates -- which IMO is reactive rather than proactive -- or in some way MMT tentatively explores the 'emotional'/'theoretical' terrain that MMR are occupying largely unchallenged.
Which mistake will have more detrimental consequences -- conflating blog arguments with academic arguments or waiting and hoping for people to realize the conflation?
But that's the point of the whole discussion (also with Carney et al.): "what if", "what if", "what if".
The only reason against JG for example is "what if...": the government malinvest it, bids on resources which the private sector would better allocate, creates a malicious incentive system, promotes corporate welfare abusing the JG, etc. etc. etc.
Overwhelming exception fallacy
I think....
To quote Rush:
"if you choose not to decide, you still have made a choice"
The main difference as I see it is MMR is laser-focused on the magic of the free-market. An almost religious belief that the private sector will always produce better outcomes than the government even in the pursuit of public purpose. Cullen would deny this but one only has to read partially through the monster thread to get the picture. The government should provide NFA's as private sector actors extract financial wealth from others by leveraging the banking system or entrepreneurs "maximizing" production, whatever that means. Any bad outcomes that befall the consumer, well, you should have played the game better. Take your medicine and be quiet. Provision of NFA's should be through tax cuts rather than spending.
Cullen says the banks suck but that's the way it is so we have to deal with the reality we have. In other words the system is broken, nothing we can do about it so let's work within that framework. MMR rejects any argument that involves fixing what's broken.
I don't know how one argues against the free market mantra - it is an emotional/ideological issue.
Those of us that were asked to leave were guilty of not accepting the claims that MMT is intellectually dishonest/intentionally promoting false understandings and the state is not the monopoly issuer of the currency. It was that trivial. Doesn't seem to me to be a healthy way to deal with differences. Only MMt'ers can be stubborn I suppose.
Cullen is the only one officially involved with MMR that has claimed that MMT is intellectually dishonest in presenting it's view of "how things work". He is promoting the views of certain individuals well-known to the community that MMT'ers don't understand the finer points of definitional terms. Those of us that argued differently were not considered serious.
It is the way they say it is. Because of this I see their movement as way more political than that of MMT. Personally, I make most of my arguments based on mathematical and systems concepts. If the math doesn't work the policy based on bad math won't work. Nor did I see anyone else involved in the disagreement make bad-faith arguments. I have read every post in the monster thread, hell, I lived it.
I hope this comment isn't perceived as sour grapes or being defensive because i wasn't treated with respect. It's just my observation of what the actual disagreements are now that I've taken a step back and looked at the episode in context.
Non political? Didn't someone the other day from MMR tell us why they voted for Ron Paul? That's ok by me, but stop with the non political nonsense.
btw wtf is Beo doing over there? .....She/he is going to regret the move... Saddens me a little actually :(.
Look, capitalism is political. The monetary system is political. The policy goals that drive macro thinking are political.
The attempt to separate politics from economics is like trying to separate reason and feeling in humans. It cannot be done other than at the margins, which science attempts to do through "objectivity." But as many critics have pointed out, this is a largely vain hope, since human beings are inherently subjective creatures and are influenced by subjective dimensions that lie below the threshold of awareness. Not only are many of their presumptions false when tested against the facts, but also human are unaware of what they do not know — the known unknown and the unknown unknown.
Even a cursory perusal at economic thinking displayed historically shows that economics is culture-bound. In the larger picture presented by an historian like P. R. Sarker and an economic historian like Ravi Batra, it is very simple to understand different approaches to economics depending on the interests of the ruling elite of the era.
Free market capitalism was developed in an era dominated by acquisitors in order to justify the acquisitive mindset. When eras shift, then the economic system changes, as it did recently in Russia and will in the West before long, as Batra outlines in his work beginning with The Downfall of Capitalism and Communism (1978).
Some people criticize Batra because he hasn't always gotten the timing right. To me as a trend analyst, that is a small discrepancy when dealing with long-term major trends. I think that most of the analysis has a sound foundation.
Proponents of Austrian economics point also to the problem of subjectivity, but overemphasize it, claiming that thinking is so subjective that nothing substantial can be known with enough certainty to act on it as policy, the implication being that natural forces beyond our control should be left to deal with it. They is contradicted by the impact that science and technology have had on humanity, raising mankind to unprecedented levels of material prosperity. Jut because the life and social science do not have the mechanistic precision of the physical sciences does not imply that they are not capable of attaining useful knowledge that can assist societies in achieving their objectives.
There is a lot that humans can know, discover, and invent, which implies that the frontier of knowledge, which combines subjective and objective is virtually infinite. Within this framework, human attempt to discover what the limits of knowledge are. We we are realizing that previous thinkers were in error when they thought that knowledge and knowing can be compartmentalized. Now we can coming to understand just how integrated the entire system of nature is and how we fit into it. But we are still a long way from a clear picture.
Leverage: "When MMr has a clear proposition and papers to back it up it may be reasonable to give it an other chance"
My position from the get-go.
Pauli, you make very good points. They couldn't even explain their own equation, so you helped them out there. Good job.
Hi everyone. I think we need to be careful about the comments and posts going forward. MMT has been portrayed (correctly to some extent) as being a "prickly" bunch. These hate filled comments don't help our cause. I think MMTers need to start being more aware of their growing reputation and how this turns people off.
Also, we have to remember who we're fighting here. Cullen is very articulate and he's incredibly effective at communicating his message. It looks like Carney has basically taken his side. We can't forget that we're fighting against people with a much broader reach than MMT currently have. Cullen seems to have a monopoly on MMT google searches and Carney obviously reaches millions through CNBC. I don't think they're the people we want to pick our fights with because they're seen as (formerly) credible representatives of MMT. Picking fights with them is only asking for trouble since they'll eventually hit back hard through their media resources.
We have to be more calculated going forward. Pick our battles, but pick them wisely.
"These hate filled comments don't help our cause"
What in the world do you mean by "hate filled"??
Annoyed seems more appropriate to me.
Pauli,
There is a lot of personal attacking going on here and on other comments I've been reading. This isn't about Cullen Roche and John Carney. It's about MMR, MMT and other macro schools. You don't defeat Market Monetarists by attacking Scott Sumner. You defeat Scott Sumner and Market Monetarists by defeating his positions. These comments here are mostly about Cullen and John as people or thinkers and they come across as spiteful and bitter. This is common in MMT discussions and it looks really bad.
MMT needs to defeat their opponents by showing their positions to be wrong. Cullen was really effective at this and he's a big loss for that reason. But we should turn the tables on him and defeat our opponents by defeating their arguments and not by making baseless claims about them as people. Keep it as respectful as possible. Things like "Monetary Retard" make us look bitter and spiteful. That does not help our cause. It hurts it.
Just my 2 cents.
I don't disagree with what you are saying but did you need to throw the "H" word out there?
Seems to me the discussion on this blog has been pretty civil. I certainly don't characterize the vast majority of comments as personal.
Anyway I agree the less said about the whole "feud" in the future the better. :-)
Paulie,
The comments in recent days come across as sneering and immature. The MMRists are definitely guilty of this, but you don't fight fire with fire.
A lot of what's been said is an attempt to marginalize MMRists as people. They're "just bloggers" or "jouranlists" or "Conservatives" or something. The fact is, the MMRists are all successful people who are well thought of. They blog on the side. And they seem to have a ton of support from other people who carry enormous credibility. JKH for instance has said he's an MMRist and he's a former central bank insider. A guy like that carries more weight than Warren does. We're not up against a bunch of "bloggers". We're up against financial professionals and in the world of finance and economics it's the financial professionals who have the money, the power and the prestige. Trying to marginalize them as people does not serve our purpose and makes us look bad. In fact, it could just piss them off and unleash a firestorm of bad karma in our direction that hurts us.
I am just trying to add my perspective here. That's all. Trying to help resolve what I see as a growing problem in MMT circles. Let's just be mindful of this.
As far as I can tell, there is only one person being snide atm and it is not the MMT side. MMT responses might be.
Whether JKH claims to be MMR or a CB insider, so what? Warren owns a bank, he works within the same rules systems.
The trouble with people in general is they're swayed by emotion rather than empirical facts. On MMR, if ppl wish to work it in with the status quo, that makes them Conservative - it is the very definition of Conservative.
I've said that from the start.
Senexx,
I know where one of the videos went that disappeared from your site. See here:
http://monetaryrealism.com/a-reply-to-winterspeak/#comment-1833
If you feel that particular video was useful I can reproduce it using xtranormal. I didn't make the original video - I just wrote the script.
Don't know why the others were taken down unless he just want's to rebrand them with the new moniker.
"However, arguments based on morality -- e.g. that everyone is entitled to employment, everyone should feel useful, etc -- will eventually fail."
They will fail with some people and not fail with others. Many people, including myself, think the moral arguments are the strongest.
That's because an instrument, like the JG, is relative to higher level goals like Full Employment at a living wage w/ Price Stability, which is turn is relative to "public purpose." Now should Government economic policy be about public purpose or something else? It seems to me that arguing from public purpose through FE/PS to the JG is clearly a better moral argument than arguing from PP through "prosperity" through "highest productivity" to targeting 4% inflation w/ 4% unemployment is.
That is, who drafted those 4% to be the scapegoats for the rest of us? That's wrong "as any fool. . . " with an ounce of religious or moral training, ". . . can plainly see. . . " the injustice of it.
It's one thing to take the MMR line on grounds that the MMT JG can't work to create FE/PS. But failing proof of that, of can't, the MMR policy is just morally inferior to the MMT position, because the MMT position clearly folows from "public purpose" which, in a democracy, certainly includes that unfortunate or incapable individuals, not be made to bear burdens additional to their bad luck or incompetence for the sake of benefiting those who are luckier or more capable. N'est-ce Pas?
Oh, btw, Beowulf is Carlos Mucha. He declared his identity publicly as part of the MMR spin-off. So, there's no longer any mystery about this. Also, my identity has long been known. I'm Joe Firestone to my friends. To others I'm Joseph M. Firestone Ph.D. in Political Science with a specialization in Comparative Politics and International Relations, and broad experience in many of the behavioral sciences and ohilosophy over the many years since.
MMT.
Has has grown out of thirty years of research, and is based on the work of generations of economists and philosophers.
MMR is three/four insufficiently-read guys leading a gaggle of insufficiently-read groupies.
That's the difference between the two.
Cullen has a political philosophy and is trying his damndest to fit his experience of reality around it.
He is a bad greek word beginning with H.
@Joe
But I think that the moral superiority of the J.G is insufficient over the long-term(decades). This is why I revert back to the 'deunionization' of the West during the 70s and 80s.
It didn't matter that unions resulted in better social outcomes. Their power was reduced. Why? If moral arguments are as powerful as you suggest than deunionization would have never happened.
I acknowledge that it maybe a bit of a stretch to compare the J.G to unionization. However such events are not uncommon. The J.G will be subject to the same pressures. Believing that it is sufficient to rely solely on moral arguments is IMO far too risky.
Further, I agree that in the current political environment the MMT is morally superior to MMR. But, in the future the J.G Institution may be viewed as not entirely serving the public interest. If popular opinion believes the J.G participants are 'living' off the system, then the J.G maybe 'torn' down. Haven't they repealed the J.G in a South American country?
This is where I see the MMR having the greatest appeal. I could imagine that sometime in the future, there is some type of inflation similar to the 70s 80s, and the J.G will be depicted as partially causing the 'crisis'. Consequently, the people will be asked what is in the public purpose? Keeping the J.G workers who are contributing to the problem, or removing the J.G program that is 'hindering' our ability to handle the inflation/crisis?
In this case the moral arguments that MMT has been using to justify the existence of the J.G fall apart. Also, you can see how the arguments made by MMR will most certainly gain traction when these events occur. Such a crisis scenario would redefine what 'Is in the public purpose'. Currently, the J.G is unprepared to handle such a situation.
I'm not questioning the moral value of the J.G. I'm not even arguing against its moral appeal in the current political environment. To me this is a no brainer -- this isn't even a debate -- J.G wins hands down in the current political and social environment. But these environments change and so will the arguments.
Importantly MMT doesn't need to wait until these social and political environments change. MMR is having a diversion effect. New people wanting to learn the MM- family are hindered by MMR. MMR has a buffering effect. People that discover MM- will have pre-existing social and political biases. MMR will appear to a certain proportion of new-comers. This disrupts the flow of newcomers to MMT. If we assume that MMT is more truthful than MMR, than those with pre-existing biases will eventually align with MMT.
However the disruption in new-comer flow remains. Some new-comers will spend a proportion of time with MMR. This has obvious detrimental effects. This is why I think it is essential that MMT in some way, moves into this 'theoretical'/'emotive' terrain that MMR is exploiting. MMTers assume that there is minor empirical basis to the MMR position. Then why is MMR gaining so much traction? To me this demonstrates the value of occupying 'theoretical' 'emotive' terrain. The MMR position is based upon these terrains, their arguments are largely emotive and theoretical, but this is proving rather effective.
MMT will be forced to move into these terrains. Sooner or later I see a counter left movement that will mould the ideas of MMT into some left-variant. Who knows how many variants of MMT will spawn up. This is inevitable as MMT process. Either MMT can preempt this process and attempt to manage it, or it can wait and hope that people will still listen to MMT once all of the MMT variants exist.
cont..
This is why an exercise such as "Explain a theoretical and/or emotive basis for the J.G" is a good idea. From the MMT perspective the debate presupposes the validity of the J.G and MMT. It is assumed that the J.G and MMT are both true. However, it will harness the creative energies of the MMT crowd in a novel way. Undoubtedly there will be interesting explanations for why the J.G is a good thing. These ideas will resonate with new-comers, etc. In a way it is crowd-sourcing the MMT J.G. It engages the MMT crowd, making them contributors, rather than consumers. It makes the MMT crowd an active part of the MMT process.
Most importantly it will have countering effect upon MMR-like variants. Previously I stated that MMR is having a hindering/diversion effect upon the flow of MMT new-comers. The MMT variants will have the opposite effect. This will remove any concerns MMT will have about the effect of MMR. At the same time MMT no longer needs to allocate resources towards MMR vs MMT debates, etc. By crowdsourcing the MMT J.G, this will essentially re-polarize the MMT vs MMR debate into something else. The resulting re-polarization will be shifted towards MMT. It will turn the debate into MMR vs (MMT and all MMT-variants explaining J.G).
This type of thing isn't going to happen without the support of veteran MMTers. Involving the crowd is a powerful tool.
Shaun H.
Shaun,
Agree with the moral arguments...
In this light, anyone who purports to be a member of the body of Christ would have to agree with the JG/BIG policy, to not be a hypocrite, after I would explain to them this scripture from Mat 20 ......Anyone.
http://mikenormaneconomics.blogspot.com/2011/12/whatsoever-may-be-just-i-shall-be.html
That said, I guarantee, that if MMT ever makes it full blown into the main stream of political discourse, many "leaders" in orthodox Christendom will be adverse to it...
"3 No one should be deluding you by any method, for, should not the apostasy be coming first" (2 Thessalonians 2:3)
Apostasy: from-standing; ie standing away from the word of God... they won't believe it.
Guaranteed.
resp,
During an acquisitive age such as we are presently experiencing, knowingly of or unknowing many intellectuals support the rule of the grand acquisitors by justifying their rule through social, political and economic institutions shaped for an acquisitive era. Intellectuals do this because it is in their social, political and economic interest in that these institutions reward them for their support with fame prestige, influence and power, and income and wealth.
It's not too difficult to see how people line up consciously or unconsciously. Those who line up consciously are generally ideologically rigid about the institutional structure and its justification. Those who do it unconsciously often give themselves away about this by having their feet in two boats, sometimes supporting the institutions but also pointing out their defects in some ways. This is currently the case with neoliberalism, as it justifies a particular view of market capitalism, which is an economic institution suited to an acquisitive era. It is also not by accident that many who participate in financial markets are Libertarian politically and Austrian economically, since those positions fitted that mindset.
During every age there is an opposition that speaks for workers, who always make up the vast majority but whose mindset does not fit them for achieving power, at least for any extended period of time. They are generally persuaded by the ruling elite of the time that the prevailing situation is the best alternative to serve their interest, which is the basis of interest politics and wedge issues.
There are always an opposition in every era, made up of the disaffected among the members of the "out" mindsets, now the warriors and the intellectuals.
Under the present rule of acquisitors, warriors have to enforce that rule and many with a warrior mindset rebel against this since the high-type warrior mindset is characterized by honor and valor. As Sgt. Thomas famously said to the NYPD, "There is no honor" in suppressing your own people, whose freedom it is your job to defend. This type of warrior is considered dangerous by the ruling elite and suppressed.
Similarly, the high-type mindset of intellectuals is the pursuit of universal ideals, such as truth and justice. They see through the subterfuge of the justifications of the ruling class by the sold-out intellectuals and speak out against it. They are, of course, marginalized and ostracized from the inner circles of influence and power.
So open your eyes and see how people are lining up and what is really happening as the hidden agenda.
The whole notion that some position is apolitical and therefore objective and "true" is just an a priori justification for that particular position. Joe, I and others have explained the epistemology behind this inherent subjectivity of knowledge, so I won't repeat it.
This is not to say that there are no empirical facts at all that can serve as objective criteria. But these are at the margin. They are the small section that people in general can agree about, to the degree that they perceive the same facts. But even here facts are shaped by the framework of perception, so there is also large disagreement over putative facts among proponents of different position, with all sides accusing the others of bad faith or stupidity.
For example, many people agree on basic facts concerning monetary operations, although even here there are disagreements. But the issues arise as soon as a party attempts to do something else with these descriptions, wherein lies economic theory and policy formulation, for example.
"From the MMT perspective the debate presupposes the validity of the J.G and MMT. It is assumed that the J.G and MMT are both true."
Not the case. MMT presumes that government exists to serve public purpose. What this purpose is has to do with facts and norms. The facts are what is explicit about institutional arrangements, such as national constitutions and codes. The norms are matters of interpretation that are dependent on ideological viewpoints whose framework is defined by norms and criteria.
Based on the Keynesian viewpoint, MMT is based on a conception of public purpose that puts high value on full employment and prices stability, hence gives achieving this high priority as a goal. This is not simply a norm, however, in that it is a political given in a liberal democracy with universal suffrage. (BTW, universal suffrage is a recent phenomenon in the developed countries and unachieved in most other places. Even in developed countries there is considerable opposition to it, and there are many attempts to undermine it. So it cannot be presumed to be universal."
Keynesianism as a macro approach argues that FE & PS is not simply a norm, however, but achieving this improves economic functioning in aggregate.
Everything else in MMT flows from either factual descriptions. or logical arguments, which are generally about causality. The JG does have a normative component, but the justification for its is economic, based on choosing a buffer of unemployment and therefore idling resources or choosing a buffer of employed and fully employing those resources. MMT backs this up with a cost-benefit type of analysis characteristic of arguments over efficiency. There are similar arguments offered about effectiveness. This makes the JG part and parcel of the MMT macro theory. Similarly, choosing a buffer of unemployed implies the adoption of a different approach to macro that doesn't view idling resources unnecessarily as inefficient — unless it is demonstrated that the MTT JG has holes in it. So far that has not been done to my knowledge.
BTW, even the choice of a monetary system is normative as the Libertarian and Austrian preference for "sound money" over fiat goes to show.
Tom,
I see Batra's "grand acquisitors" here:
"17 This, then, I am saying and attesting in the Lord: By no means are you still to be walking according as those of the nations also are walking, in the vanity of their mind,
18 their comprehension being darkened, being estranged from the life of God because of the ignorance that is in them, because of the callousness of their hearts,
19 who, being past feeling, in greed give themselves up with wantonness to all uncleanness as a vocation." Eph 4:17-19
The greek word translated here "greed" is pleonexia which can be translated as "more-having", it doesnt have anything to do with "money" specifically, so I would caution Christ Jesus believers to recognize that Paul is talking about people who in general are given to be perhaps "over-acquisitive" to use a word coming from Batra's view.
Resp,
I see I am still being tarred and feathered over here for my "snide" position. If any of you are curious as to how this whole fight ACTUALLY played out then please review the actual comments and not the revisionist history that some have created. The rhetoric only rose to the levels it did because MMTers do what they always do and got emotional in comments and started slinging insults. If you want to fault me for consistently trying to keep the peace, realizing that wasn't going to work and then finally standing up for myself then so be it....
http://monetaryrealism.com/china-inflation-may-provide-room-for-stimulus-economy-bloomberg/#comment-2746
I cannot believe that the Fed does not know by now that the jig is up and that they will be leaving the Monetarist fold at some point in the future (even if it's 5-10 years).
It's always seemed to me that one possible point behind MMR is to roll out the welcome mat for Capital: come over to MMR--4% unemployment is better than 2%.
Any 'New Fed' based on/justified by MMR would be a huge personal win for the MMR advocates.
Wouldn't this be the chance of a lifetime?
(More popcorn).
But look, I don't know why Neil Wilson gets to be the attention vortex all the time. I'm going to start calling him Marsha:
http://www.youtube.com/watch?v=-yZHveWFvqM
Signed,
Jan
Cullen invited us to look at this post:
"http://monetaryrealism.com/china-inflation-may-provide-room-for-stimulus-economy-bloomberg/#comment-2746"
Towards the end of the discussion Cullen says this:
"The banks create new loans/deposits independent of the govt.…
…If you guys want to say that the govt has a monopoly on certain forms of money then fine. But being the monopoly supplier of types of money or even NFAs does not give you the right to argue that the entire spectrum of money is a govt monopoly that requires price setting that validates certain govt spending programs"
This is the main crux of the disagreement so far between MMR and MMT (personal animosities and differences over the JG aside) that created most of the angst and led to "bannings" (which now appear temporary, which is good). Dan K. has been giving it his all.
I am still reluctant to post over there because, well, I don't feel welcome.
I wouldn't mind seeing a discussion on the substance of the quoted statement over here where it could be discussed without censorship or threat of censorship.
If anyone of the PTB here thinks that would be fruitful…
And my question if I did post one over there would be:
How many new loans would a bank create independent of the government if the loans weren't backed by the full faith and credit of the Central Bank?
Loans create deposits is a truism. What follows from it is what is significant.
Borrowers take out loans to use for either investment or consumption. Final settlement of all transactions in a modern monetary economy other than intrabank takes place in either physical currency (cash) for spot settlement or by bank draft that requires an exchange of reserves between banks in the interbank system the central bank to clear. The sole source of reserves is the central bank, which alone has the power to issue reserves. While it is true that this is not the only way to configure a monetary system, it is the one we have and are likely to have for some time.
The interbank market for reserves is also under the exclusive control of the central bank, and the central bank has the power to set the overnight interest rate, thereby determining the base "nominal price of money," influence other interest rates, hence the saving rate and borrowing cost (prime rate) in the economy. The central bank can also control the yield curve if it desires to do so. This is an example of monopoly power. It turns a modern economy intro a command system instead of one in which the market determines the interest rate.
Government possesses many other monopoly powers affecting price, such as setting the minimum wage, bidding for resources, and adjusting its fiscal balance, which influences non-govt net financial assets.
While governments could choose not to use their monopoly power over their currency, they do in fact use many of these powers. Imagining that a modern government using state currency would either abandon its currency or reject using any of its monopoly power over currency is not only counterfactual but would involve a restructuring the economy.
All that happens through government is a matter of political choice. Admittedly, monetary operations could be different than they are. However, given what they are, certain things follow, and one of these things is the given of macroeconomics, since government is one of the principal sectors considered.
For example, in a fiat system government has policy space that it does not have in a fixed rate system, both fiscal and monetary, since there is no limitation on reserve creation by the central bank and government is not operationally constrained in such as way that it must fund itself with either revenue or borrowing. The only actual constraint is availability of real resources and the only financial constraint is maintenance of price stability, which involves adjusting effective demand to productive capacity. If effective demand exceeds the capacity of the economy to meet it, inflation as a continuous rise in the price level will result.
(continued)
(continuation)
Adjusting effective demand to productive capacity also involves employment rate, since if there not enough demand to purchase the level of output at full employment, then firms will cut back by laying off workers. This results in idling resources, and rising economic inefficiency.
There is a choice between accepting idle resources or not accepting them given the policy space provided by the current monetary regime. MMT recommends using that policy space to avoid idle resources and also avoid price instability through implementation of the MMT JG, which involves a buffer of employed to ensure FE and a price anchor in the form a floor wage.
The requirement here is based on taking full employment and price stability as national policy, as stated in the congressional mandate to the Fed and showing how fiscal policy is economically superior to monetary policy. This is not an operational requirement but a macroeconomic one that flows from effectiveness wrt established national policy in setting goals and efficiency of means.
MMT is not setting FE & PS a norm, but offering an effective management approach to meeting existing national policy in way that is also more efficient that current policy managed through using the interest rate as a target for controlling inflation and letting unemployment float through a buffer stock of unemployed. That is not consistent with national policy as expressed in the Fed's mandate.
MMT shows how fiscal policy can accomplish what monetary policy has failed at, and it justifies this based on both efficiency in using resources and effectiveness in meeting goals, which are the hallmarks of good management.
This is normative and political to the extent that national policy is normative and political. One of the chief purposes of macroeconomics is to formulate policy options for meeting national policy objectives as efficiently as possible with available resources while ensuring that sufficient resources will be provided for future needs.
OK, just so this isn’t so one-sided and even though I absolutely hate doing this and nobody should really care anyway, I’m going to have to present my side if only once for the record.
Yes, I did get overheated a few times, as I’ve done over the years here and there on the blogs. I’m not proud of it, but it happened. However, a few things were (conveniently?) left out.
First, regarding the discussion on 12/08/11, I apologized and retracted my statements . . . twice. The first time was within 20 minutes:
“OK, I take back that last part [i.e., calling the comment “ideological”] since I didn’t at first see that you did in fact cite a paper. . . . ”
http://pragcap.com/the-politics-of-mmt/comment-page-1#comment-90659
Right below it I retracted again about 2 hours later:
“Again, sorry about the “100% ideology” statement. Didn’t see your link, and was glad to see it when I went and looked more carefully because it didn’t seem like the sort of statement you would just make without some sort of back up.”
http://pragcap.com/the-politics-of-mmt/comment-page-1#comment-90683
Regarding the comments on 1/2/11, yes, again overheated and regretting it. Later, I again apologized, again within a few hours on the same night:
“Sorry. Not my intention. I felt you were getting personal with statements like “shockingly naive,” but I should have avoided escalation.”
http://pragcap.com/the-evolution-of-mmt/comment-page-1#comment-94512
[Note that my statements were called “shockingly naïve.” Good thing I never said that. Who knows what the response would have been.]
Interestingly, on 2/6/12 at Heteconomist, it was already suggested that my earlier comments instigated “all of this.” When I pointed out my retractions(http://heteconomist.com/?p=4262&cpage=2#comment-45759) the response was this:
“Scott, I am not “pinning” this on you so I am sorry if you take my comments as such. I think you’re brilliant and I’ve told you that before so it’s not my intention to pin anything on you. If anyone is to blame for starting all of this, it is me. I accept full responsibility for it.”
http://heteconomist.com/?p=4262&cpage=2#comment-45769
To recount, the comments that “started all this” were retracted on the same dates as they were made. A bit over a month after the last of those comments and retractions, it was suggested that it wasn’t the intention to “pin anything” on me and that I was not to blame. It was further suggested that I should not interpret the references to my earlier comments that had been retracted as suggesting that I was to blame. Now, a bit over a month after that, it’s all my fault again and my retractions were not recognized.
Again, I hate giving any of this any attention whatsoever. I make no claims of innocence and regret any role I've played in "all this." But the previous description of events was incomplete.
Best,
Scott Fullwiler
Actually Scott, you came back 3 weeks later and called me an ideologue again in an even worse rant. So yes, your apology was insincere and inconsequential. You've tried to play both sides of this since day one by saying things to me in private to appease me while saying contradictory things in public. Anyone who actually goes back and reads the record of events will very clearly see that I was trying to keep the peace until early January but was repeatedly called names and threatened (at times with physical violence). I didn't begin to respond negatively until the attacks became so repeated and vicious that I started to jump in the mud pit myself. That was, admittedly, a colossal mistake. I've learned my lesson about debating with MMTers and it's become clear that I am not the only one in this field who feels that way....You guys have a well known reputation for being vicious and nasty with everyone who criticizes MMT. Maybe this is a turning point in that attitude? I certainly won't be engaging you all on your own turf or my own because I know that nothing good comes of it.
Honestly, I thank you for all your time and effort with me over the years. I've learned a lot from you and you've been a hugely positive influence. I will never forget that. So thanks and sorry it's come to this. I wish it hadn't. I wish I'd responded better and I wish you all had as well. I really wish I'd been able to sway someone other than Warren back in January because it never would have come to this....Either way, good luck.
I was referring specifically to the ones you referred to specifically, or so I thought. At any rate, it wasn't my fault in your own words even after that one (whatever it was), and now it is. So be it.
And, likewise, thank you for your efforts over the years. I have a great deal of respect for your intuition, insights, and intelligence about financial markets and will continue to send students to your site to learn no matter what else may happen or has happened.
Not the case. MMT presumes that government exists to serve public purpose. What this purpose is has to do with facts and norms.
I don't follow how this is a negation of my point?
I stated:
From the MMT perspective the debate presupposes the validity of the J.G and MMT. It is assumed that the J.G and MMT are both true.
This implies what your saying. In both instances the MMT position is built upon assumptions about what the objective is. These assumptions in conjunction with MMT 'thinking' define what is truth, wrt to economics.
:)
BTW thanks for insight about Acquistors.
Not the case. MMT presumes that government exists to serve public purpose. What this purpose is has to do with facts and norms.
I don't follow how this is a negation of my point?
I stated:
From the MMT perspective the debate presupposes the validity of the J.G and MMT. It is assumed that the J.G and MMT are both true.
This implies what your saying. In both instances the MMT position is built upon assumptions about what the objective is. These assumptions in conjunction with MMT 'thinking' define what is truth, wrt to economics.
:)
BTW thanks for insight about Acquistor
Shaun, I don't understand "MMT and the JG are both true." The JG is a piece of MMT as a macro theory. Your wording suggests that MMT and the MMT JG (difference from other JG's) are different at the same level, whereas the MMT JG is a building block of MMT macro.
Again, I don't understand the statement that "MMT and the JG are assumed to be true." MMT as a macro theory cannot be assumed to be true. Theories can never become "true," because science is always tentative, in that hypotheses can always be disproved by counterexample. The MMT JG is a hypothesis of the MMT macro theory, and so it can be shown to be false also, as opponents have attempted to do by appeal to empirical evidence to counter it in addition to making ideological objections.
Can you explain more clearly what you mean?
Let me attempt to clarify the issue further, which is assumptions in economics. Economics uses assumptions, descriptions and hypotheses to build models. The assumptions function like axioms or postulates. The choice of foundations determines the logical (deductive) structure of the model. General descriptions are functions in which empirical data supplies the arguments to arrive at specific outcomes. Hypotheses are the testable aspect arrived at through linking descriptions in inferences. A model constructed of these elements is the formal representation of a theory.
Theories are ways of organizing knowledge. No matter how well confirmed the construction piece are, a theory as a whole can never be conceived of as "true" due to unknown unknowns that can counter significant aspects of the theory when discovered, requiring that the theory be either adjusted or replaced.
Hypotheses are not assumptions in the same sense that theoretical assumptions are in that hypothesis call for testing while assumptions are assumed for convenience. They may even be known to be simplifications used to facilitate formalization. Many economic models are built on assumptions that no one claims are true empirically.
For example New Classicalism is based on the assumption of a representational agent that is a rational actor pursuing maximum utility. Economics simply assume this for the convenience of model-building, even though it is well-known that agency and motivation are hypothetical in other sciences, where different positions are hotly disputed.
MMT as a macro claims to be built chiefly on an operational description of the existing monetary system, dispensing with many of the assumptions of New Classicalism and New Keynesianism that are demonstrably false, like loanable funds, or overly simplistic, as is the case with agency based on narrow methodological individualism.
The MMT JG is also a hypothesis following from the macro theory. MMT economists have written extensively about confirmation of the MMT JG hypothesis and adduced evidence for it where possible and simulations where not. The MMT JG is not an assumption in the ordinary sense of the term in economic model-building. It is, however, an essential aspect of MMT macro in that it is integral to it in meeting the goal of economic effectiveness based on utility, while also increasing economic efficiency — greater welfare and decreased idle resources.
If there is an economic assumption involved in MMT, it is that FE and PS are high priorities for a macro explanation. Not all economists agree that this is so, notably some Austrian economists. However, FE & PS are received as national policy objectives from "outside." Moreover, there are good arguments macro-wise that FE & PS is also more economically effective (greater welfare) and more economically efficient (greater employment of resources and greater future productivity) than not FE & PS, and MMT economists hold that this is demonstrable.
The JG is a piece of MMT as a macro theory. Your wording suggests that MMT and the MMT JG (difference from other JG's) are different at the same level, whereas the MMT JG is a building block of MMT macro.
But does it matter? In either scenario my 'assertion' still holds.
Either way, I intended it to be understood as the J.G being a subcomponent of MMT. Perhaps my usage of the english language needs improvement.
MMT as a macro theory cannot be assumed to be true..,
Maybe I should have used a different word instead of true? Valid? The 'word' is meant to convey the idea that the MMT description of the economy is beyond question. This is because the focus of the 'J.G theoretical/emotive' proposal isn't about establishing the merits of MMT or the J.G. This is presupposed.(Maybe another misuse of words).
I'm trying to say that MMT should create a context where both the MMT and JG are both 'true'. This is to avoid debate regarding the validity of MMT and JG. For example, creating a competition around -- "Create a theoretical/emotive/empirical basis that explains why the MMT JG works" implies a few things. That the JG works and MMT is valid. This creates a favorable context wrt to MMT. It sidesteps the a debate regarding if MMT and JG are true.
Perhaps that is a little clearer?
Best to be careful using the term "true." it has a very specific meaning in science. Only descriptive propositions that have been empirically verified are semantically true, while tautologies are analytically true a priori. "Valid" applies to the logical form. "Sound" applies to a logical argument in which the the logical form is valid and the premises true descriptive propositions.
General descriptions are hypotheses. They state hypothetically that all arguments for a a particular function are true descriptions of facts that can be verified empirically. A single counterinstance falsifies as general description.
Theories are built of hypotheses, so falsification of a theoretical hypothesis decreases the "weight " of the theory. If a single hypothesis is crucial, it can even undermine the theory, but generally several falsifications of hypotheses are required to lighten the weight of a theory enough to call it into question and require a re-do.
Colloquially in English these words have a somewhat looser meaning, so one has to be careful to make oneself clear when the discussion is technical.
This can be a significant problem in blogging even among experts who sometime switch back and forth from the ordinary meaning of a term, which is ambiguous, to the technical definition.
So you were not "wrong." I was just trying to clarify your meaning by making it more precise to avoid confusion.
:) Thanks for the lesson Tom.
Very good high-level discussion of some issues attached to MMT. Tom's views and mine on Theory Construction and Testing overlap a great deal, though our vocabulary may be very different in describing some of the nuances. For example, I get the feeling that I'm a bit tougher when it comes to falsifying theories than Tom is, and also I don't assume that theories can't be true, just that we can never be certain that they are.
Moving to Cullen's intervention saying that he still thinks we're beating him beating him up over here. Well, first, I don't think that one person's criticism of another should be viewed as beating them up unless ad hominems, labeling views or people without explanation, and personal attacks are used in the criticisms. I didn't see that in this discussion, and I'm sorry that Scott felt it necessary to apologize to Cullen again in view of the fact that Cullen clearly gave as much incivility as he received during the MMT/MMR debate.
In my view, there are no apologies necessary here on either side. We have important policy differences between the two groups over whether millions of people who want full-time jobs shall have them or not. Those are high stakes. And some shows of emotion on either side of the disagreement don't really require apologies, I think.
Finally, Tom said:
"Joe, I and others have explained the epistemology behind this inherent subjectivity of knowledge, so I won't repeat it."
I have explained at length that theories are fusions of fact and value, and that because they are MMR's stated purpose of removing value judgments and sticking to pure description isn't something the MMR principals and their collaborators can ever accomplish. I also think, therefore, that their continuing claims that MMR will focus only on facts, and not contain theoretical or policy biases based on implicit or explicit value judgments are misleading at best. My views against the fact-value dichotomy are here: http://www.kmci.org/media/Against%20The%20Fact-Value%20Dichotomy.pdf They include examples of the difficulty of distinguishing between fact and value even at the level of single sentences, much less at the level of whole bodies propositions like MMT or MMR.
However, I've never said that I think there is an inherent subjectivity of knowledge. In fact, I think that objective knowledge and subjective knowledge both exist, and that, further, knowledge is of three types, material, mental, and cultural. My views on that are here: http://www.kmci.org/media/Whatknowledgeis%20(non-fiction%20version).pdf And the theory of knowledge expressed applies to fusions of fact and value expressed in language, not to "fact statements" that appear to be value-neutral, but keep their value aspects implicit in background knowledge or unstated assumptions governing the processes of category choice, variable selection, and fact statement selection.
Shaun Hingston: I could imagine that sometime in the future, there is some type of inflation similar to the 70s 80s, and the J.G will be depicted as partially causing the 'crisis'. Consequently, the people will be asked what is in the public purpose? Keeping the J.G workers who are contributing to the problem, or removing the J.G program that is 'hindering' our ability to handle the inflation/crisis?
Shaun, knowledge is power. So I do agree with your idea that moral arguments should be made carefully, are not always the strongest. They should always be grounded in genuine understanding, to avoid being perverted as above. Everybody always claims he is arguing for the right, the good thing. The most important thing MMT will do is to (re) - edumucate people to understand the craziness, the wrongness of the above scenario. The JG is not inflationary, but disinflationary/deflationary. It is basically the least inflationary path to full employment. And full employment is intrinsically disinflationary. Forcing people to not do stuff results in less stuff being done. A smaller pie to divide, so the pie piece claims depreciate in value = inflation.
Con men can always come along & say: Quit your job & give me $100. Then a giant rabbit will appear & give you $1,000,000. Some will fall for it. But most won't, because most people know it is ridiculous. The goal is for everyone to understand the ridiculousness of not having a JG in the same visceral way.
MMT presumes that government exists to serve public purpose. No, it doesn't. It presumes, along with everyone else without severe cognitive impairment, even Maggie Thatcher a few decades ago, that "public purpose", "society" etc are intelligible concepts. That everyone understands well enough, no matter how they pretend they don't. The JG imho should not be understood as "normative", but as a consequence of other norms which are universally paid at least lip-service to. If you want full employment & price stability, you are led inevitably to the JG, in essence the only universal path to these goals. And if you want "full productivity" - realistic understanding shows "full employment" (& somewhat less essentially, price stability) are necessary, so FP-->FE&PS-->JG too.
As Bill Mitchell puts it in Whatever – its either employment or unemployment buffer stocks
"Again these were considered to be the big theoretical challenges for macroeconomists – how to maintain full employment but at the same time also make that goal consistent with price stability. ...I didn’t invent those goals. They are not left-leaning or right-leaning. They are the core business of macroeconomics."
The JG is just MMT taking care of this business.
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