Fun read. Excellent example of framing through metaphor. Definitely take a look if you are interested in a popularized and simplified presentation of a rather abstruse MMT point that works.
Read it at Naked Capitalism
Anonymous: The Fable of “Moral Arithmetic”
By Anonymous
Originally published at Global Economic Intersections
(h/t paul in the comments)
I don't think that moral arguments can be dismissed out of hand. They are powerful arguments that influence the views of a whole lot of people in that they are norms that define the boundary conditions of a world view by providing criteria for evaluation.
George Lakoff makes the point that conservatives, especially, are driven by morality, and they often either ignore, deny, or misrepresent facts that contradict their moral principles. This is also true of radicals at the left extreme of the political spectrum. It is a sign of an ideologically driven mindset, along with the rejection of reasoning as decisive. Ultra-conservative rejection of the scientific enterprise is a case in point, as it the ultra-radical rejection of capitalism as having any value at all, which even Marx saw as extreme, admitting that the capitalism of his day was responsible for many people living a better life than previously in history.
According to Lakoff the center is constituted of people who are "bi-conceptual," their moral allegiance divided between left and right, holding some positions that are liberal and others conservative. People scoring toward the center of the political compass test are bi-conceptual. These are people that can be persuaded by moral arguments coupled with factual premises that argue for a moral position that fits the facts.
This is the challenge that popularizing MMT solutions presents. Many of these solutions, like a job guarantee, are deeply distastefully morally to many people, often because of conceptual biases. The challenge is to show how the solution is not only economically efficient and effective, which MMT does in terms of an operational description and the macro theory, but also the moral solution as well.
It should not be too difficult to argue against blaming people for their own unemployment for moral reasons when there are ten dogs and only nine bones, or blaming homeowners faced with default when 105 marbles are owed and there are only 100 marbles in the game. How can people be held morally responsible for circumstances beyond their control?
Tom -
ReplyDelete"as it the ultra-racial rejection of capitalism"
perhaps should be:
"as is the ultra-radical rejection of capitalism"
"How can people be held morally responsible for circumstances beyond their control?"
ReplyDeleteTom,
I think you have just described the essence of my entire being. ;)
Great write up Tom.
Resp,
If I'm reading it correctly, this anonymous piece seems to take a very lax attitude toward debt bubbles, suggesting that they should always be followed up by monetary easing sufficient to validate all the debts, so that all the debtors can pay their debts and all of the creditors get paid.
ReplyDeletePracticed consistently, I suspect that would be a very inflationary policy approach, with creditors feeling free to run up lending wildly, and with no inhibitions, in the confidence that the monetary authority will always come along and bail them out.
Another approach would be to put the social burden of debt discipline on the side of the creditor, and make sure that even if the debtors are bailed out, creditors who lend recklessly have their operations unwound and taken over.
In the example, the teacher should put Timmy out of the marble lending business, taking some of his marbles as a penalty.
@ Unforgiven
ReplyDeleteThanks, fixed.
@ Dan K
ReplyDeleteThat's why I am saying that moral arguments have substance. Morality is not divorced from reality as the normative and descriptive distinction would suggest. The norms a society follows determine its institutions and their arrangement (formal rules and informal routines).
Continually saving the debtors when things go wrong due to institutional issues results in untoward consequences that the moral repugnance over this kind of behavior intuits. The facts show that this just funnels money, often ill-gotten, to the top.
While it is silly to punish the victims, it is also silly to incentivize the behaviors that chronically lead to the same results.
The system has to be righted so that disruption is minimized and reforms instituted to prevent recurrence.
So mentioning the "MMT solution" without giving the whole solution may result in factual misunderstanding and moral reaction.
MMT has to be present as descriptive-causal and normative-prescriptive to be taken as a credible solution. It needs to be appreciated holistically or it will not be appreciated for what it is.
So far, I am unaware of a comprehensive popular presentation of the issues and options, and proposed solutions. That is needed.
"I am unaware of a comprehensive popular presentation of the issues and options, and proposed solutions."
ReplyDeleteOne could look at the JG as a bit of a "cleaning up after morons" type of operation, but it is certainly better than what we have now....
Resp,
Tom, I agree. There is no value-neutral or morality-neutral approach to economic policy, and MMT provides a framework for thinking about a particular realm of economic phenomena and policy choices.
ReplyDeleteAs it happens, your comment is timely, because I have been working an an essay called "The Moral Vision of the Job Guarantee" which tackles the various moral and ideological objections to the JG head-on.
So far, I am unaware of a comprehensive popular presentation of the issues and options, and proposed solutions. That is needed.
ReplyDeleteI sense you want a religion to go with the economics.... Interesting.
"Continually saving the debtors when things go wrong due to institutional issues results in untoward consequences that the moral repugnance over this kind of behavior intuits."
ReplyDeleteMaybe the institutional bias that encourages people to take on debt has something to do with that.
I think it is unfair to blame folks that get caught in a financial whirlwind for being influenced by others taking advantage of a bubble, especially when our glorious leaders are cheering us on all along the way.
GWB after 9/11: Just keep shopping…
Standing by and allowing people suffer for decades may seem like a fair smiting for bad behavior but we are also shooting ourselves in the foot. We need to do something.
We can start by not encouraging people to go into debt.
@ Dan K
ReplyDeleteI think that the economic argument boils down to either a JG, a BIG, or govt subsidized hiring by the private sector. But even with the later two, there is likely to be chronic involuntary UE. As Randy argues, the JG should remain relatively small through out the cycle if the rest of economic policy is well-configured.
There needs to be enough bones for all the dogs, or there will be victims of a poorly designed system that cannot escape the consequences. They the employment race become a game of musical chairs.
Similarly unsustainable private accumulation without govt offset becomes a game of old maid.
There will be people in bankruptcy and people without jobs through no fault of their own but rather owing to the design of the system.
"GWB after 9/11: Just keep shopping…"
ReplyDeleteAnd they did, problem is that Rummy did too! With a blank check!
"You go to war with the "DoD" you have": I guess Rummy didnt have any economists on staff????
Resp,
Shaun,
ReplyDeleteI want an economics to go with my "religion" ;)
Cheers.
Yes, there are a lot of arguments out there focusing on the economic benefits of the JG, Tom. I'll let the real economists handle that. But I'm interested in getting people to see that the Job Guarantee expresses a high moral vision of a society based on reciprocal obligations, mutual support, fellowship and the work ethic. I'm sick of letting people like Carney get away with mocking and disparaging this view of society and our moral potential.
ReplyDelete"I sense you want a religion to go with the economics.... Interesting."
ReplyDeleteNecessary in the US, where most political arguments are moral these days. Liberals are losing these arguments by focusing on reasoning from facts and ignoring the moral dimension as "unscientific" or something.
As Robert Johnson of INET recently said, "Economics is politics, politics, politics." And politics is essentially ideological and moral in many places like the US and Germany. If one doesn't meet the moral argument in its own ground, one will lose the argument even though one may win it logically and factually.
If the JG were to replace the current unemployment benefits regime (limiting present benefits to those who can't work), it could adopt the slogan, "Paying people to work instead of paying them not to work." It could even have been called "workfare" had that neologism not been ruined by neoliberals.
ReplyDelete"We can start by not encouraging people to go into debt."
ReplyDeleteThe way to do that is simple. Pay them enough not to have to borrow so much.
Actually, the monthly nut has become a means of social control. It's part of financialization. It will be difficult to change this model in the US.
Matt: "I want an economics to go with my "religion" ;)"
ReplyDeleteSums it up. I lot of the moralizing is just mindless. We can be both mindful and moral, sort of like walking and chewing gum.
"I'm sick of letting people like Carney get away with...."
ReplyDeleteDan consider you may not be able to count on the fact that Carney can understand the math necessary to understand the injustice of the "send in 10 dogs for 9 bones" type of scenario.
Consider he may not be able to see this from a true mathematical perspective.
I know this may sound unbelievable, but until someone admits or claims to understand this, and/or ideally exhibits the ability to explain it, even as simple as it may sound to you, it may not be a given imo...
he may not be able to see "10 does not equal 9" in the dog bone analogy.
He may look at it as "well, the 10 dogs all had the same, fair chance", and stop right there.
He is in a way applying "equity" which is a mathematical concept, but to equity of 'opportunity', not equity of outcomes. He may not be able to see that scenario cannot lead to a successful outcome by mathematical design (we know only a moron would send in 10 after 9 : but he doesnt "get it").
It's like there is a battle between "fairness" and "equity" going on so to speak.
Resp,
Matt, he understands it perfectly well. He thinks that less-than-full employment system is a good thing because it keeps all ten dogs hungry and scared, and because the nine winners will get less in the end, which makes the stuff you and I and Carney buy cheaper.
ReplyDelete"Economics is politics, politics, politics."
ReplyDeleteEconomic policy and implementation is guided by politics.
The economy just reacts mathematically to the pressure applied to the system at different points. We could make policy at random the way Bill Walsh used to script the first 30 plays for the SF49'ers and have just as good an outcome as that planned by our great and glorious leadership.
By trying to cut the budget in response to too little money in the citizens pockets, guided by uninformed politics, can anyone be surprised that the outcome is guaranteed to be at odds with expectations?
The question practically answers itself.
Of course, the cynical view is the politicians know exactly what they're doing, so why would they listen to us? It's us they're trying to enslave.
So then the question is can politics even be used as a tool for change anymore?
Matt: "he may not be able to see "10 does not equal 9" in the dog bone analogy. He may look at it as "well, the 10 dogs all had the same, fair chance", and stop right there."
ReplyDeleteThis is exactly the Libertarian-Austrian and neoliberal point of view. It's called "social Darwinianism" aka the survival of the fittest and also the law of the jungle. Those folks are fine with it until someone tries to eat their lunch, then they want the security forces to protect their persons and property, and they look for government to rescue them because they are "socially and economically necessary." It's such self-serving BS.
I am not claiming that this is anyone in particular's view, just that it is commonly held. People that may be perceived as holding it are free to dissociate themselves from this view. Or else they should explain why they hold it is it's morally OK only to have none bones for ten dogs, and why it makes economic sense when it is unnecessary operationally.
Dan,
ReplyDeleteLook at the comments over there.
If it was not for Paul pointing out the math, no one would "get it".
Even with Paul pointing out the math, most STILL dont "get it" over there.
Shortly in we read: "But there ARE only 100 marbles, so unless Teacher adds marbles into the room, Timmy can only get back as many marbles as he put in."
HARD STOP! (Unless you are a MORON!)
No more writing is required for me. The rest of the story is a waste of time. The rest is not necessary....
I "get it" right there, no need to go on, dont waste your ink.
Look at the comments.
Here's one: "Economics is most definitely NOT a math nor engineering problem! Economics is political."
another: "Engineering (however lame it is) attempts to deal with the real world; economics does not."
Another: " if one take a peek over at Steve Keen’s work one see that the marble lending do not need to suddenly spawn extra marbles as long as loan can be down-paid over time"
MOOOOOOORRRRROOOOOOONNNNNNNSSSSSS!
Suggest don't assume even what you may look at as the most basic mathematical application skills by individuals you encounter in this....
Resp,
Dan,
ReplyDeleteFor instance here is Carney's post on a JG via domestics for the top 5%:
http://www.cnbc.com//id/47322452
There is no math in it, perhaps except for this area:
"This might seem to create a revenue problem for federal government..... Wouldn’t everyone choose to avoid taxes by hiring domestics?"
Then he goes on to do some artithmetic about how it "wont cost that much" in essence...
This is what Mike has coined "Taxpayer on the hook!" and Tom often calls the false "Govt as Household" analogy.
Carney does NOT get the math... he cannot see the mathematical reasoning behind why you would not "send in 10 after 9".
I'm not saying that he can't see that "10 does not equal 9" on it's own, it is that HE CANNOT APPLY IT.
There is more to math than regurgitation; one has to be able to apply it.... Carney cannot apply the math in this regard.
Resp,
"…HE CANNOT APPLY IT."
ReplyDeleteThis is the root of the problem.
We can describe a simple closed system as a glass of water - the quantity of water is the system and extend it to the economy of USD balances.
This is not a great leap and we think we have done our job…
Crickets.
Then off on some tangent.
My wife said to me this morning after listening to a burb about Romney and his job creation skills (paraphrasing)…
"ordinary people don't see the difference between a household budget and the governments budget - thinking otherwise would be illogical…"
I replied that ordinary people grew up playing Monopoly. Did they not notice that the bank never ran out of money?
Paul,
ReplyDeleteIt's like when Warren says in indignation: "no mattter how much I cut off the board is still not long enough"
That is a mathematical statement...
And then Bill wrote the other day: "Those advocating fiscal austerity or those who claim that the amount of outstanding private debt is simply too large for the Government to replace with public debt fail to understand the basic tyranny of the sectoral balance arithmetic."
These morons consider themselves under no such tyranny... could get back to their zealous Libertarianism at some level.... they seek not to be subject to anything, even THE TRUTH of mathematics.
Dark.
resp,
The problem is that nine dogs and ten bones assumes a fixed number of job offers. Those on the right argue that the number of jobs is never fixed because "America is the land of opportunity," and all that Horatio Alger stuff. According to them, some great fortunes began with selling pencils on a street corner. It's all part of the "American exceptionalism" narrative, or should I say "myth" instead of "narrative." In fact, they actually believe that hard times test people's souls and bring out the best in them. So not having a job offer and being without work is the opportunity of a lifetime to break out of the pack and test your mettle.
ReplyDeleteI kid you not. That's their jobs program for solving unemployment.
Tom,
ReplyDeleteThis distills down to another math argument.
The guy on the street corner that starts out selling pencils simply takes a job from someone else.
Since I like to use Apple Computer as an example in many of my arguments, we could also say that Apple is creating a lot of jobs. Just look at all th emoney they are making.
In reality, they are sucking the life out of other companies that can't compete (RIM, Nokia, Dell, HP, etc.) without having to scale up their employment.
The only job creation would be among companies springing up selling accessories for Apple gear.
HP just announced a layoff of 27,000 workers.