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Monday, March 5, 2012
Randy Wray responds to John Carney — MMT FOR AUSTRIANS PART TWO: Disagreements Among Reasonable People
What do people think about this? I agree with the substantive points Wray makes, but his tone bothers me somewhat. I've thought before that some of his responses to innocent questions on the MMP blog are a bit aggressive in tone, and this post goes well beyond that.
I've only been following MMT for about a year, so maybe I missed the phase when MMTers were patiently engaging with critics, but it seems that just when people are starting to discover MMT in large numbers, posts like this one will turn people off and discourage them from making honest enquiries about MMT ideas.
See your point but consider that reading dialogues can be an effective form of edification... Tom has more info on this but I believe Socrates used the dialogue format... and there are the epistles of St. Paul... etc..
Not on you account John. The part of the post where Wray addresses you was quite even-handed in my view.
I was more thinking of his broadside on the MMR guys. The critique of S=I+(S-I) seemed justified to me, but it was mixed in with some more personal jibes. By conceding the moral high-ground, it allows others to focus on the personal remarks and ignore the more substantive points made. I see this is already happening at the MMR blog.
I think that there is an important distinction to be made between spirited debate and ad hominem attacks. Let's have a spirited debate and leave the personal aside. Obviously, in making objections or rebutting, specifics have to be cited, and that often means naming names.
The debate about these issues has been contributory in my view, which is why I have tried to post a record for reference. It is advancing knowledge of MMT in the blogosphere, especially for people that don't have time, interest or economic chops to go through professional papers. Macro is policy-oriented and the ideas have to boiled down for popular consumption. That is a good exercise in communication for professionals, too.
For example, a debate began some time ago over saving and investment at Interfluidity with Steve Waldman, which was joined by JKH. The debate continued later at Asymptosis with Steve Roth, again joined by JKH. That migrated over to MMR.
When JKH joined the debate, it centered on clarifying the accounting, and the suggestion was that MMT economists had not done this sufficiently, so that some of their blog statements are controversial. That is where we are now.
The debate is about achieving clarity of basic concepts like saving and investment, which tend to be ambiguous due to their many uses. So far, a lot of good stuff is coming out as different people add their views. It's also an opportunity for others to attempt to restate the ideas in their own words and get feedback on where they may be somewhat off-base.
So let's all settle down and enjoy the ride. This is supposed to be fun, too.
Wray brought out the MMT secret weapons: 9 teated cows, immaculate conception and progressive wet dreams. Disarmed the antagonists with humor then punch them right in the gut with the argument.
I guy I used to work with has some cows and once when he was trying to get the one impregnated, IIRC he was spending some hundreds of dollars to have another guy bring his champion bull over to impregnate her.... COD.
John Carney's response... http://www.cnbc.com/id/46628940//
I think this is more of a political argument. Many contend that Social Security is bad for society in the same sense that Welfare and the Great Society has destroyed the concept of family. So do you trust a government to properly regulate and monitor whether we have the productive capacity to take care of those in need or do you leave it up to the free market? Was the repeal of Glass-Stegall a good idea? That certainly "unregulated" some of the banking rules. Many argue this lead to the GFC. I have read many MMT authors discuss the hazards of safety nets and government programs from farm subsidies to banking to education to unemployment to health care and on and on. It's all there.
What MMT shows is that there is always a full employment budget based on the sectoral balances and the govt fiscal balance offsetting non-government saving desire.
How the budget is allocated is a matter of political choices depending on what kind of a society the electorate wishes.
And taxes don't fund government disbursement (expenditure and transfers). Taxes are used in functional finance to withdraw NFA from non-government to achieve price stability at full employment.
That means that taxes don't actually fund SS operationally, even though there is FICA imposed politically to make it appear that way. The real issue is availability of real resources and the choices we as a country make today will influence the availability of real resources in the future. Then the voters in the future can choose how they wish to allocate them through the budgetary process when that time arrives.
If people understood how this actually works operationally, the country could have an intelligent debate about this bassed on fact and practical possibilities instead of ignorance and imagination.
What does Wray's piece have to do with Austrians? Carney isn't an Austrian and I see no evidence that Wray knows the first thing about Austrian concepts. Or that Carney does or that any MMTer does.
"I agree with the substantive points Wray makes, but his tone bothers me somewhat."
I would say not even "somewhat". It was rude and condescending. Well beyond the ad hominem line. And I agree with all his arguments. Still, you don't use ad hominems like talking about the opponent's "brilliance" in quotes. That is so middle school, really regrettable. Either you have an argument or not, adding that the opponent is "brilliant" only implies that you don't.
So do you trust a government to properly regulate and monitor whether we have the productive capacity to take care of those in need or do you leave it up to the free market?
There is no "free market" in taking care of those in need. "Those in need" have already fallen out of the market. There is no economic profit to be made servicing people who have no money.
Note that an economic system that dooms a certain percentage of the population to joblessness, idleness and want enacts a monstrous injustice.
If the needy or jobless can't obtain funds via the market then they die, or are supported by others. Whether that role is served by government or private individuals/institutions is a political decision. In the U.S. we've decided to have government provide most of the funding via child tax credit, EITC, SSI, unemployment assistance, etc. The history of this country, at least, shows private institutions are unable or unwilling to shoulder the burden. The alternative is these people die in the streets, victims of an economic system they did not create, which institutionalizes unemployment and artificial scarcity.
What do people think about this? I agree with the substantive points Wray makes, but his tone bothers me somewhat. I've thought before that some of his responses to innocent questions on the MMP blog are a bit aggressive in tone, and this post goes well beyond that.
ReplyDeleteI've only been following MMT for about a year, so maybe I missed the phase when MMTers were patiently engaging with critics, but it seems that just when people are starting to discover MMT in large numbers, posts like this one will turn people off and discourage them from making honest enquiries about MMT ideas.
Ben,
ReplyDeleteSee your point but consider that reading dialogues can be an effective form of edification... Tom has more info on this but I believe Socrates used the dialogue format... and there are the epistles of St. Paul... etc..
Resp,
I'm a big boy. I don't mind spirited debate. So don't worry about his tone on my account.
ReplyDeleteNot on you account John. The part of the post where Wray addresses you was quite even-handed in my view.
ReplyDeleteI was more thinking of his broadside on the MMR guys. The critique of S=I+(S-I) seemed justified to me, but it was mixed in with some more personal jibes. By conceding the moral high-ground, it allows others to focus on the personal remarks and ignore the more substantive points made. I see this is already happening at the MMR blog.
I think that there is an important distinction to be made between spirited debate and ad hominem attacks. Let's have a spirited debate and leave the personal aside. Obviously, in making objections or rebutting, specifics have to be cited, and that often means naming names.
ReplyDeleteThe debate about these issues has been contributory in my view, which is why I have tried to post a record for reference. It is advancing knowledge of MMT in the blogosphere, especially for people that don't have time, interest or economic chops to go through professional papers. Macro is policy-oriented and the ideas have to boiled down for popular consumption. That is a good exercise in communication for professionals, too.
For example, a debate began some time ago over saving and investment at Interfluidity with Steve Waldman, which was joined by JKH. The debate continued later at Asymptosis with Steve Roth, again joined by JKH. That migrated over to MMR.
When JKH joined the debate, it centered on clarifying the accounting, and the suggestion was that MMT economists had not done this sufficiently, so that some of their blog statements are controversial. That is where we are now.
The debate is about achieving clarity of basic concepts like saving and investment, which tend to be ambiguous due to their many uses. So far, a lot of good stuff is coming out as different people add their views. It's also an opportunity for others to attempt to restate the ideas in their own words and get feedback on where they may be somewhat off-base.
So let's all settle down and enjoy the ride. This is supposed to be fun, too.
For the record here, I am led to believe JKH reeeeeeeaaallly knows banking; huge asset to the blogosphere... ;)
ReplyDeleteResp,
Wray brought out the MMT secret weapons: 9 teated cows, immaculate conception and progressive wet dreams. Disarmed the antagonists with humor then punch them right in the gut with the argument.
ReplyDeleteI guy I used to work with has some cows and once when he was trying to get the one impregnated, IIRC he was spending some hundreds of dollars to have another guy bring his champion bull over to impregnate her.... COD.
ReplyDeleteResp,
John Carney's response...
ReplyDeletehttp://www.cnbc.com/id/46628940//
I think this is more of a political argument. Many contend that Social Security is bad for society in the same sense that Welfare and the Great Society has destroyed the concept of family.
So do you trust a government to properly regulate and monitor whether we have the productive capacity to take care of those in need or do you leave it up to the free market?
Was the repeal of Glass-Stegall a good idea? That certainly "unregulated" some of the banking rules. Many argue this lead to the GFC. I have read many MMT authors discuss the hazards of safety nets and government programs from farm subsidies to banking to education to unemployment to health care and on and on. It's all there.
What MMT shows is that there is always a full employment budget based on the sectoral balances and the govt fiscal balance offsetting non-government saving desire.
ReplyDeleteHow the budget is allocated is a matter of political choices depending on what kind of a society the electorate wishes.
And taxes don't fund government disbursement (expenditure and transfers). Taxes are used in functional finance to withdraw NFA from non-government to achieve price stability at full employment.
That means that taxes don't actually fund SS operationally, even though there is FICA imposed politically to make it appear that way. The real issue is availability of real resources and the choices we as a country make today will influence the availability of real resources in the future. Then the voters in the future can choose how they wish to allocate them through the budgetary process when that time arrives.
If people understood how this actually works operationally, the country could have an intelligent debate about this bassed on fact and practical possibilities instead of ignorance and imagination.
What does Wray's piece have to do with Austrians? Carney isn't an Austrian and I see no evidence that Wray knows the first thing about Austrian concepts. Or that Carney does or that any MMTer does.
ReplyDeletemaybe you need new glasses?
ReplyDeletePersonally, I think Randy got it exactly right. There has been some serious crap thrown up since the dust up over the JG and it's not all the JG.
ReplyDelete"I agree with the substantive points Wray makes, but his tone bothers me somewhat."
ReplyDeleteI would say not even "somewhat". It was rude and condescending. Well beyond the ad hominem line. And I agree with all his arguments. Still, you don't use ad hominems like talking about the opponent's "brilliance" in quotes. That is so middle school, really regrettable. Either you have an argument or not, adding that the opponent is "brilliant" only implies that you don't.
So do you trust a government to properly regulate and monitor whether we have the productive capacity to take care of those in need or do you leave it up to the free market?
ReplyDeleteThere is no "free market" in taking care of those in need. "Those in need" have already fallen out of the market. There is no economic profit to be made servicing people who have no money.
Note that an economic system that dooms a certain percentage of the population to joblessness, idleness and want enacts a monstrous injustice.
If the needy or jobless can't obtain funds via the market then they die, or are supported by others. Whether that role is served by government or private individuals/institutions is a political decision. In the U.S. we've decided to have government provide most of the funding via child tax credit, EITC, SSI, unemployment assistance, etc. The history of this country, at least, shows private institutions are unable or unwilling to shoulder the burden. The alternative is these people die in the streets, victims of an economic system they did not create, which institutionalizes unemployment and artificial scarcity.