Tuesday, May 1, 2012

Cullen Roche — Does Anyone Actually Know What MMT is?

 At the risk of stirring up a hornet's net. :)

Yes, it's the JG again and apparently contradictory asserts about its status in MMT. It's short.

Read it at Modern Monetary Realism
Does Anyone Actually Know What MMT is?
by Cullen Roche

While the post is short, the comments bring out the understanding, or misunderstanding as the case may be, about the MMT and MMT in general upon which the MMR position is built as a counter to MMT that retains the monetary description (and claims to improve upon it) while abandoning much of MMT macro theory and policy formulations that follow from it. Cullen mounts arguments that attack not only the MMT JG, but also key MMT fundamentals such as a currency sovereign as monopolist.

Responses from both sides, and other sides, too, welcome here. "Let  hundred flowers bloom."

87 comments:

Anonymous said...

moronic and pointless as usual

Anonymous said...

As MMR slips into irrelevance, beat the dead horse a bit more to gain some sort of relevance again.

How are these massive critics of the status quo and dominant economic doctrine doing for CR? Ah, he hasn't shaken neoclassics, monetarists and other hopeless people a single bit.

Because MMT, JG and socialism is such a threat to USA, better deal with that problem.

Meanwhile, in reality...

geerussell said...

It struck me as wholly manufactured "contradiction" using a short sentence out of context.

Jonf said...

I don't understand his arguments here any better than a few months ago.

widmerpool said...

So did Mitchell or Wray kick his dog?

What is the point of all this?

Anonymous said...

seems like they spend most of their time arguing with that eccentric vincent cate fellow. too bad, i really liked when mike sankowski posted at traders crucible.

Peter said...

We look petty writing childish ad hominems. Let's be above that and just move on. MMT has bigger wars to win than the minor one with MMR.

Jonf said...

Wray said at the end of his post on the JG monday:
"So, can we have MMT without a JG? Certainly!"

So that triggerd CR I suppose. But then Wray also said:
"But if we leave out the JG in our recommendations, we are seriously remiss in our advice."

It does seem we should move on.

PeterP said...

@ Peter

From Peter to Peter: well said!

Not sure what CR wanted to prove here beside that he is pissed, but we already knew that...

Peter said...

@PeterP

I don't think Cullen is angry. I think he feels misled about what MMT really is. He's said this many times. He learned MMT from Mosler who said the JG was optional in Soft Currency Economics. And then Mitchell told the world the JG was not optional and that it was central to MMT. The JG is the key piece of MMT because it provides full employment and price stability. It's what makes MMT a macro answer to our problems. There's no reason to back away from that position. MMT has to convince the world that it's the right position and I think we have the correct and convincing argument to do so. MMT has bigger battles to win. Frankly, so does MMR so I'd love to see them refocus their writing as well.

OhMy said...

CR quoted Wray out of context. Wray says you can have MMT without the JG but it is stupid. Like you can have a Germ Theory without administering antibiotics and vaccines but it is stupid. So Germ Theory can be taken by some “apolitical people” into Germ Realism = Germ Theory minus the "ideological crazy talk" about vaccines and antibiotics. ;)

Tyler said...

Cullen is a friend of ours. Sometimes you get in little fights with your friends, but you still remain friends.

We need our modern money army to grow, not shrink. Cullen's one of us.

Ryan Harris said...

The NEP article by Wray a couple days ago must have once again provoked the pragmatic capitalist himself.

http://neweconomicperspectives.org/2012/04/mmp-blog-48-is-the-job-guarantee-necessary.html

Anonymous said...

There is no MMR if you try to define MMR as being anything else than Cullen's bitterness. Let's recall how It all got started. Bill Mitchell said he didn't approve the source(Pragmatic Capitalism) and Cullen started complaining that his site gets 500 000 views a month and he is been promoting MMT. He had been, there is no doubt about that, and I don't know why Bill had to say something like that. Regardless of that, this MMR business is silly nonsence

Andy said...

I'm fine with :

MMT with JG / Full employment

MMR without JG/ We know unemployment works

Is that clear enough ?

confused said...

I don't want to stir things up here, but I am also confused by Wray's comments. If you don't have the JG then you don't have full employment and price stability. I thought the primary goal of MMT was establishing full employment and price stability? Even Wray says this in his book. Tom Hickey has previously stated on this site:

"The present discussion has brought out more clearly how MMT is a comprehensive macro theory that needs the JG to reach a unique solution to the main thrust of macro, that is, optimizing production, employment and price stability. MMT economists assert that the JG is integral to their contribution toward this.

Bill Mitchell explained it in a recent post, and I assume that Randy is going to elaborate on that, so the first post will be a prerequisite to what comes after. I'll put the next one up when Randy posts it.

BTW, Randy worked this up in Understanding Modern Money (1998), so its been out there from the beginning. Apparently a lot of people missed it, so I would guess that Randy will essentially summarize what he wrote at that time, maybe adding some detail that wasn't there, too."

http://mikenormaneconomics.blogspot.com/2012/01/randy-wray-weighs-in-mmt-jg.html

Chewitup said...

Cullen also has an issue with the State as a monopolist of money.
My sense is he just does not see the JG as politically feasible.

geerussell said...

confused,

That's why the way the comment was taken out of context is so problematic. In context, it's a clear statement that if you abandon the policy (JG) you abandon the goal (FE&PS) according to MMT.

beowulf said...

I'll simply associate myself with these remarks.
"To come back to the job-guarantee approach, I think asking the government to create jobs directly is not a robust solution. The problem is that the program goes right into the budget firing line, where it will get chopped up. That was the experience with CETA, the Comprehensive Employment and Training Act, back in the 1970s. So I prefer to think in terms of how to get decentralized institutions doing useful things, with their own funding streams, so that you can create jobs that endure. Education, health care, social services, home care, neighborhood conservation…"
http://tinyurl.com/78b8dnw

beowulf said...

I'll simply associate myself with these remarks.
"To come back to the job-guarantee approach, I think asking the government to create jobs directly is not a robust solution. The problem is that the program goes right into the budget firing line, where it will get chopped up. That was the experience with CETA, the Comprehensive Employment and Training Act, back in the 1970s. So I prefer to think in terms of how to get decentralized institutions doing useful things, with their own funding streams, so that you can create jobs that endure. Education, health care, social services, home care, neighborhood conservation…"
http://tinyurl.com/78b8dnw

confused said...

Hi Geerusell,

If you abandon the JG then how are you consistent with MMT? I was always under the impression that the power of MMT was that it offered a unique solution for full employment and price stability. If you believe in unemployment buffer stocks then you're no different than other neoclassical economists. But now some MMTers seem to be saying it's okay to believe in unemployment buffer stocks and still be consistent with MMT. I don't see how this is at all consistent with what many MMTers have written in recent years?

Matt Franko said...

" the program goes right into the budget firing line, where it will get chopped up"

You mean for political reasons? ie "midnight basketball"?

Certainly NOT for logical reasons right? ie "taxpayer on the hook!" ie "we're borrowing from our grandchildren!" right?

Resp,

geerussell said...

beowulf,

What do you think about the further shading placed on those remarks here and here?

Letsgetitdone said...

Randy said:

"So, can we have MMT without a JG? Certainly! We already have modern money systems with sovereign currencies and without the JG. MMT is the proper way to analyze these. I believe it is a policy mistake to operate a modern money system without a JG—but that is what almost all countries do. MMT allows us to analyze them, and to offer policy recommendations.

But if we leave out the JG in our recommendations, we are seriously remiss in our advice."

I think this plain enough. Randy's saying that the MMT framework is the proper one to use in analyzing economies with fiat currency systems. He's also saying that if you want to recommend economic policies to them that will produce Full employment w/price stability then you have to include the JG as part of the policy combination you're going to recommend for that purpose.

I don't think this is change in Randy's position at all. Nor do I think any other MMTers have a probem with it. I'm sure Warren, Bill, Stephanie, Scott, Pavlina, Marshall, Mike, and anyone else closely associated with the core MMT group agrees on this.

I think MMR's "gloating" over what Randy said is just silly and also disingenuous. That is, CR doesn't recommend the JG and he does not agree with the MMT mainstream that a program including the JG will produce Full Employment w/Price Stability. Now that's a core theoretical difference.

In addition, Mike has blogged a policy target of 4% UE and 4% inflation for MMR. But MMT writers have the target of FE w/price stability, where FE is FE, if anyone is still unemployed it's by choice. And the PS target isn't even mentioned at all. So, there's another concrete difference.

jrbarch said...

Highly politically incorrect but:

"Oh Mind, you lead me on such a merry dance. First you make me find a huge great chunk of stone. Then weeks of labour carving it out. Then you make me fall down and worship it, bringing gifts and penance".

[Loosely paraphrasing Kabir's insight of the power of the mind to turn something simple - like fundamental human need - into dysfunctional ideology!]

Anonymous said...

CR: "The disagreement is more fundamental than this. The reason we originally rejected the JG was because we disagreed with the MMT idea of the money monopolist. This is the basis of the MMT idea rationalizing the JG. According to MMT a monopolist sets prices. That’s just what it does. But we don’t have a money monopolist in the USA. We have two distinct and separate money issuers in an independent banking system and the state. So the whole money monopolist idea doesn’t apply and the rationale of the state always being a price setter is wrong. MMR disagrees with this MMT theory of the way the money system works and I think anyone who understands modern banking can see that the MMT ideas are wrong. There is no money monopolist, banks don’t serve public purpose and the MMT hierarchy of money is easily proven wrong."

I mean, seriously, this is just meaningless, muddled and irrelevant drivel.

There's no point engaging when the standard of argument and thought is so low.

The guy apparently has no idea how to construct coherent and sustantive arguments. So instead he comes out with this tripe. It's a joke.

Sorry for the rudeness, but the lameness of his arguments is just breaktaking.

Anonymous said...

breathtaking

Trixie said...

MMR: Inject drama, conflict, and gossip at every possible turn unless we get our way.

Cullen Roche is a fraud. He's had absolutely nothing to do with developing of 20+ years of the core of MMT, but always wanted to make it appear otherwise because OMG I have a LOUD megaphone at my finance blog. He's stated that he and Bill Mitchell are colleagues and speak on a regular basis. Turns out Bill Mitchell has never spoken to him. He's talked to Mosler ONCE on the phone (Warren only knows Cullen from his blog), and only recently due to the OUTRAGE of the JG policy because it "displeases" him. Because of how "unproductive" the program would be while he and 40% of GDPers spend their days making money off of money, producing NOTHING of value. But when 1-3% of GDP is spent employing all those that want a job and building up local communities? OMFG, YOU ARE TRYING TO DECREASE MY STANDARD OF LIVING. He disagrees with how the MMT "team should be run", as though he is a decision maker. Once the JG debate broke out, he "desparately wanted Warren to side with him". And when THAT didn't happen, we get:

"MMTers never wanted to share the spotlight with me so now I am perfectly fine shining it very brightly on them."

And every "discussion" thereafter has devolved into:

http://www.youtube.com/watch?v=nInE5TITzE8

And the other MMR co-founder, Beowulf, spends his time trumpeting 'Morgan Monetary Theory', ie "ebay hiring hall". Which is nothing more than an online version of Speenhamland. A program he had THIS to say about BEFORE the JG became the "hot topic":

"OK, that’s horrifying. This will end up with the employer paying $1/hr and the govt paying $7/hr. That’s some high-octane corporate welfare. If someone is so lacking in mental or physical abilities that their labor is only worth $1/hr, just put them on a disability pension and move on. Otherwise you’re just creating a double dose of turbocharged Speenhamland (on steroids!), so to speak. And if you don’t know what that means…
Speenhamland was an attempt to raise earnings without placing a burden on employers. If wages fell below a certain level, the government made up the difference; as wages rose, the government benefit fell.
Employers soon discovered they could “game” the system by cutting wages below what workers were really worth to them. Before Speenhamland, they would have gotten what they paid for: mediocre, malnourished, resentful workers. Or none at all. But with the country taking up the slack, they had nothing to fear.
The Poor Law Commissioners’ Report of 1834, summarizing the failed program, called Speenhamland a “universal system of pauperism.”

“In the long run, the result was ghastly,” wrote economic historian Karl Polanyi in his 1944 classic The Great Transformation . “Wages which were subsidized from public funds were bound eventually to be bottomless.” The result was that, as Notre Dame University Teresa Ghilorducci puts it, “The government subsidized wages so much they went broke.”
http://www.thesocialcontract.com/artman2/publish/tsc_19_3/tsc_19_3_rubenstein_3_printer.shtml"

Letsgetitdone said...

Anonymous,

"I mean, seriously, this is just meaningless, muddled and irrelevant drivel."

The claim that the Government is not the money monopolist is one that conflicts with CR's favorite MMTer Warren Mosler. Warren's written beautifully on this subject from earliest MMT days and would never agree with CR that the facts show it's not a monopoly and that MMT is wrong about this. In fact, I can't believe that Beowulf and Mike support this decision. I also think that Cullen's disagreement is based on semantics rather than facts.

Anonymous said...

"To come back to the job-guarantee approach, I think asking the government to create jobs directly is not a robust solution. The problem is that the program goes right into the budget firing line, where it will get chopped up. That was the experience with CETA, the Comprehensive Employment and Training Act, back in the 1970s. So I prefer to think in terms of how to get decentralized institutions doing useful things, with their own funding streams, so that you can create jobs that endure. Education, health care, social services, home care, neighborhood conservation…"

beo, this seems absolutely sensible. I do believe that sensible people can disagree with the JG because it is impractical politically, or should be experimented with first. But Cullen's reason for being against was so disgusting (the fear and experience of unemployment will spur job creation and grindstone and burning midnight oil until we create our own finance blogs) and comes from such a privileged viewpoint. He has absolutely no idea what it's like to face long-term unemployment, to grow up in communities where the majority of role models are unemployed, etc.

beowulf said...

Leaving aside that your iteration of CR is different from the one the rest of the world deals with, I'm not an advocate of a job guarantee. I was merely pointing out that its probably impossible to implement unless its set up along the lines your friend Morgan Warstler has suggested. I'll add that Speenhamland didn't have an auction system to bid up wages (or modern minimum wage laws, which I've long argued are set too low).

What's disconcerting is how few people realize JG and workfare are the same thing operationally. Personally I think a guaranteed income system administered as a negative income tax is both more humane and easier to implement than forcing people to sing for their supper. I guess we'll have to agree to disagree on that Trixie.

Anonymous said...

It's really too bad, because beo and mike are both extremely smart and sensible fellows.

After these repeated tasteless performances, I wouldn't have a drink with Cullen if you paid me.

Anonymous said...

"I was merely pointing out that its probably impossible to implement unless its set up along the lines your friend Morgan Warstler has suggested."

You really believe that scrapping the minimum wage and replacing it with a meat market for labor is more politically feasible than the JG?

"What's disconcerting is how few people realize JG and workfare are the same thing operationally."

Is this the case? Warren has repeatedly said that the JG is entirely voluntary.

Letsgetitdone said...

Carlos, You know better than this:

"To come back to the job-guarantee approach, I think asking the government to create jobs directly is not a robust solution. The problem is that the program goes right into the budget firing line, where it will get chopped up. That was the experience with CETA, the Comprehensive Employment and Training Act, back in the 1970s. So I prefer to think in terms of how to get decentralized institutions doing useful things, with their own funding streams, so that you can create jobs that endure. Education, health care, social services, home care, neighborhood conservation…"

First, you know that if the President minted that $60 T PPC, it's game over for the budget firing line. Once there's no BS about running out of money and no debt subject to the limit the JG would have to be debated on the merits. So, if as part of a larger program it works to produce FE w/ PS then why not continue it.

Second, I agree that we should get decentralized institutions very much involved in the JG. But, the funding streams of those institutions are exactly what wage earners won't be able to rely on in times like these. No jobs that aren't backed by the fiat currency issuer are "safe." And, in addition, however much we emphasize decentralized solutions of the kind Jamie prefers, in the end we're still back down to a UE buffer stock, so we've still got less than FE.

We can have Galbraith's preference and also have FE. The JG program isn't competitive with other approaches to creating FE, or even with also providing a BIG to increase individual freedom, for those who prefer to work on things that no one else thinks is valuable at their home.

beowulf said...

"You really believe that scrapping the minimum wage and replacing it with a meat market for labor is more politically feasible than the JG?"

No, you're missing my point. I'm saying by the time a JG got through Congress that's what it would look like. If you don't believe me, google Georgia Works 2012 (and that plan has no auction system to allocate the free labor).

If I had my druthers I'd raise the minimum wage to $12/hr,as Ron Unz suggested in The American Conservative.

beowulf said...

"Is this the case? Warren has repeatedly said that the JG is entirely voluntary."

Ditto with workfare. Nobody is forced to work. Either way, working = check
not working = no check.

Anonymous said...

"Ditto with workfare. Nobody is forced to work. Either way, working = check
not working = no check."

Wrong, but typical misrepresentation.

Wray: Throughout our discussion of JG I have always presented it as an “add-on”. We can retain (and even add) any safety net we want. We can retain (and even add) any other macro-stabilizing policy (monetary or fiscal) we want. They are still policy options once we’ve added the JG. We can have the BIG and we can have the pump-priming—if we find some need for them. Personally, I do not think we’ll need either. But we can implement the JG and see—if we still need to fight inflation or insufficient demand or exchange rate instability, so be it. We have all policy options available.

PaulJK said...

MMTers are so mad that MMRists called them out on their political agenda. This comment section is the usual display of bitter and angry MMTers converging to whine about the failure of the public to accept their liberal policies.

I personally like how MMTers say we live in an MMT world, but that you can't blame them for what goes on in that world if you don't implement the full slate of MMT policy ideas. Or as Tom Hicket previously said:

"As I have said many time, the MMT JG is integral to MMT as a macro theory. Policy options follows from the macro. As MMT economists have said, you can adopt any aspects of MMT macro as policy options but if you don’t adopt all, including the MMT JG, don’t blame them for MMT “not working.”

Trixie said...

Ok, Beowulf, got it. The "free" market can only exert itself through ebay. Who knew? Which coincidentally enough works well for internet start-up "guys" and personal injury lawyers.

PaulJK says: MMTers are so mad that MMRists called them out on their political agenda

Riiiight. Because in the MMR "reality" primer, "productivity" is the primary goal. Never mind that it's not in our current monetary system. Or that they are advocating policies that SHOULD be and not what is. Not to mention the fact they refuse to define what "productivity" even means, much less how to measure and target it. Yeah, no politics there, these are just "powerful" concepts once you connect the dots.

Anonymous said...

Trixie, I've seen you trolling these websites before. I am guessing you need one of these government jobs because you have so much free time and the Morgan Warstler ebay process doesn't go over well with you because then you'd have to compete for something rather than hoping the government just gives it to you. Too bad for you.

Oh, and production is the basis of all economies. But who needs details like that?

Tom Hickey said...

@ Paul K

I agree that the discussion has become heated and mostly off-track. I see I need to present CR's major objections clearly and separately in order to elicit a more direct response. That will take another post, if I get to it.


Here are the major objections in a nutshell.

1. "MMT" is a confused concept in that is sometimes claimed that the MMT is integral to the theory (descriptive and explanatory) and at other times it is presented as a voluntary policy option (prescriptive and pragmatic).

2. The state theory of money is wrong, because taxes don't drive money, and the government does not exert a monopoly over money. As Warren Mosler has said, "deposits create reserves."

3. Imports are not benefits in real terms of trade because their price is jobs (and entire industries) and this still leaves the exporter with claims on the real resources of the importer saved as debt in the importer's currency.

CR summarizes them here:

http://monetaryrealism.com/does-anyone-actually-know-what-mmt-is/#comment-5923

Don't take this as the last word, since he has more complete arguments scattered elsewhere in posts and comments.

Cullen also complains that commenters here have avoided addressing his specific objections.

http://monetaryrealism.com/does-anyone-actually-know-what-mmt-is/#comment-5925

Tom Hickey said...

"production is the basis of all economies"

Right. The macro trifecta is production (growth of both product and productivity leading to rising living standard), employment, and price stability. Every macro theory has to resolve this trifecta to meet the criteria of effectiveness and efficiency. Macro theories are compared on how they resolve this trifecta. The most effective and efficient theory is the choice to be used for policy formulation, since economic policy choices are justified based on theoretical predications and their testing.

MMT claims to have resolved this trifecta more successfully than other theories. MMR asserts that the claim that the MMT JG leads to FE and PS is false, since testing through simulation doesn't show that as claimed and the MMT is a price buoy rather than a price anchor.

JK said...

An issue that I was discussing with Cullen, and I'm still unclear about is the following:

What does a monopoly currency issuer have to do with the JG?

Does it really matter if the U.S.Gov is not a "pure" monopolist (i.e. banks create money too)? It seems like all that matters for implementing a JG is that the U.S.Gov can not run out of dollars, there is no contraint on it's ability to pay the JG wage.

Cullen often argues that because the U.S.Gov does not have monopoly control over money creation, that this negates the JG.

I can't see the connection between the two.

Any thoughts?

beowulf said...

"Ok, Beowulf, got it. The "free" market can only exert itself through ebay. Who knew?"

Wynne Godley and Bill Vickrey naturally. As it happens, I'm neither an internet start-up guy nor a personal injury lawyer so I won't take that personally.

"There is, in this model, neither a short nor a long term market clearing mechanism which brings (or which fails to bring) supplies into equivalence with demands with the important exception that prices do clear the market for equities and bonds."
http://www.ipc-undp.org/publications/srp/TOWARDS%20A%20RECONSTRUCTION%20OF%20MACROECONOMICS.pdf

eBay's system of proxy bidding is similar, but not identical, to a Vickrey auction.
http://en.wikipedia.org/wiki/Vickrey_auction

Anonymous said...

"What does a monopoly currency issuer have to do with the JG?"

From Scott Fullwiler:

"4. The state can set the price that it will pay to purchase goods and services, and this will have some effect on the aggregate price level. How much depends on how significant the state’s purchases are relative to purchases others make. (In the case of the Job Guarantee, for instance, this effect wouldn’t be overly strong—the stabilization effect on aggregate prices in that case comes mostly from the functional finance nature of the spending on the program. Setting the JG wage has the effect of not pushing up private sector wages, but it does not itself mean private sector wages won’t rise—that effect will mostly be tempered by the countercyclical spending on the program, and even then there are other things in the economy that can affect costs and prices. The claim is that the JG will not be inflationary and will be somewhat stabilizing, not that it will set the aggregate price level—and again, even in that case the effect is through functional finance, not setting the wage.) So, “monopoly” here is simply monopoly over the prices of the things it buys or sells, which in the real world states often don’t exercise at any rate."

I have no idea why Cullen thinks the existence of the horizontal sector means that the JG cannot work.

Letsgetitdone said...

Anonymous and Trixie have done such a good job of repelling the flack that I have very little to add but on this

"We can have the BIG and we can have the pump-priming—if we find some need for them. Personally, I do not think we’ll need either."

I agree on the pump-priming, and I also think we don't need the BIG for FE w/PS with either, but we have to remember as well that if our goal is public purpose, then the BIG may contribute to that if you think that there's a place for work performed without a by-your-leave from authorities in either the Government or non-Government sectors.

I believe there is or at least ought to be a place for this, provided that one thinks it's part of public purpose to create real freedom for individuals.

beowulf said...

"Throughout our discussion of JG I have always presented it as an “add-on”. We can retain (and even add) any safety net we want... But we can implement the JG and see..."

1. "We" can't implement anything. A federally funded jobs program has to pass both houses of Congress.
2. You're assuming Congress will give the long-term unemployed an option between continual unemployment benefits and a guaranteed job. That is not going to happen. Its difficult enough to get Congress to extend UI benefits past the standard 26 week time limit. it's exceedingly unlikely Congress would approve both a JG and extended UI benefits.
3. Its no misrepresentation to point this out. You're kidding yourself if you think a JG as enacted by Congress, would be any different from workfare (one point in JG/workfare's favor is it could be made available to the unemployed who are no longer-- or never have-- qualified for UIB).

Essentially the MMTers are fighting a 3 front war, authorizing a new govt program without diminishing current benefits; appropriating funds for this program off-budget (otherwise paygo rules will require offsetting spending cuts or tax hikes); administering the program in such a way that it can quickly scale up or down counter-cyclically while retaining political support (Congress will have to appropriate new funds every year). It has too many moving parts.

Anonymous said...

Wray is of course talking about the economic possibilities.

But yes, considering politics, TC rule will have to come first. :)

Tom Hickey said...

@jk

A monopolist controls supply therefore can control either price and letting quantity float or quantity and letting price fluctuate.

A government that is sovereign in its currency, having a limitless supply of currency available operationally, can set price (floor wage) and let the number taking advantage of the JG change cyclically. Operationally, the capacity is there to fund everyone at any wage in case there was zero private employment, which, of course would never happen, and availability of real resources, hence inflation nominally, remains a constraint. But this is something the monopolist can potentially do, which no currency user can. Banks can create currency but only in response to demand by creditworthy customers within the limits of risk to a bank's capital.

Tom Hickey said...

There is theory, policy, strategy, and tactics. It is necessary to keep what we are talking about straight.

Theory established what is possible. For this a set of policy options follows. Based on policy goals, a strategy for implementing a mission to achieve those goals is devised. The strategy is implemented incrementally by tactics, which adjust based on feedback.

MMT as a theory claiming to show that it is possible to resolve the trifecta of production, FE and PS more efficiently and effectively though the sectoral balance approach, functional finance and the MMT JG. The logical policy goals would therefore be optimizing production at FE and PS as the theory explains. The strategy would be to create a mission plan to achieve those goals. Tactics would be the specific steps needed to be taken.

It might be that a JG would be ruled out politically as an initial tactic due to the composition of the legislature, for instance. That would not mean having to abort the entire plan just because an important element could not be achieved in the desired time-frame, since implementing the sectoral balance approach and functional finance would move the ball forward considerably.

So the strategy and tactics would change and also the policy options to be excerised immediately.

Letsgetitdone said...

"1. "MMT" is a confused concept in that is sometimes claimed that the MMT is integral to the theory (descriptive and explanatory) and at other times it is presented as a voluntary policy option (prescriptive and pragmatic)."

I think you meant the "JG" in the above Tom. First, MMT is a not a concept. It is a conceptual approach which includes concepts, propositions, identities, and theoretical statements. Second, The JG is integral in the sense that MMT economists think it ought to be a component of a comprehensive fiscal policy if the goals of such a policy are to attain and maintain FE w/ PS. Third, it is presented as a "voluntary" policy in the sense that you can choose other buffer stock options and fail to reach FE w/ PS if you want to. But according to MMT, you must choose some buffer stock, and a full employment buffer stock is the best option if your goal is FE w/ PS and your overall goal is public purpose. This is quite clear here: http://www.correntewire.com/the_job_guarantee_and_the_mmt_core_part_one

2. The state theory of money is wrong, because taxes don't drive money, and the government does not exert a monopoly over money. As Warren Mosler has said, "deposits create reserves."

Warren has clearly stated that the Government is the money monopolist in our system. See: http://www.moslereconomics.com/mandatory-readings/full-employment-and-price-stability/ he also maintains this paper of Pavlina's as "mandatory reading." http://www.epicoalition.org/docs/Pavlina_2007.pdf He clearly believes in the State Theory of Money.

3. Imports are not benefits in real terms of trade because their price is jobs (and entire industries) and this still leaves the exporter with claims on the real resources of the importer saved as debt in the importer's currency."

MMT sees imports as exchanging real wealth in return for electronic credits in USD. So, in terms of real wealth, imports are a benefit, and exports are a cost. The price we pay in jobs isn't necessary, but is a function of the political choices we make. We can make all the new jobs we want if only we appropriate the money, to do that. MMT is clearly saying that we could have the benefits of importing more than we export, and provide all the jobs we need at a living wage.

As for the claims the exporter will have on our real wealth at some later time. The exporter to us may or may not exercise those claims. If they insist on always exporting more than they import from us, then they will constantly be in the position of accumulating a real wealth deficit. If, on the other hand, they decide to export less than they can eventually get even with us. This choice is up to them. We will have wealth to sell if they want to buy and the balance of trade will eventually even out.

There is a problem with this, of course. There may be some industries and jobs that the US needs to retain here as a matter of national security and industrial policy. Warren mentions that in his book, and there are no MMT economists who claim that there aren't sectors of the economy in which imports greater than costs don't produce a benefit for the US. The statement “n terms of real wealth, imports are a benefit, and exports are a cost, remains true as a macro statement, but it may not be true when talking about specific sectors.

I hope the above addresses CR's objections specifically enough. But some of this is addressed in more detail in my “e-book” series on the controversy here: http://www.correntewire.com/the_job_guarantee_and_the_mmt_core_series

Mike S said...

Tom,

Can you come over and write for us?

;)

The JG is a political loser. It's difficult to design. It's harder to implement in an effective design. It's impossible to manage once it's implemented. It can't be funded today. It employs mentally ill people.

These are all reasons to not like the JG. I don't know why you'd go to the floor for something with this many flaws and such weak benefits, even if it does employ everyone.

I know I'll have to say it 1000 more times, but if you can't get a job when the UE rate is 4%, it's because you are mentally ill in some way.

You could promote full employment with some inflation using the TC rule and substituting NGDP level targeting for inflation targeting like our "enemy" david beckworth says.

beowulf said...

"The BIG may contribute to that if you think that there's a place for work performed without a by-your-leave from authorities in either the Government or non-Government sectors."

"The Other Milton Friedman: A Conservative With a Social Welfare Program"
http://www.nytimes.com/2006/11/23/business/23scene.html

Tom Hickey said...

Joe:"I think you meant the "JG" in the above Tom. First, MMT is a not a concept. It is a conceptual approach which includes concepts, propositions, identities, and theoretical statements"

I am summarizing CR's objections as I understand them. In brief, he asserts that the way MMT economists use "MMT" as a label is ambiguous at best and appears to be inconsistent. He believes he has provided textual evidence.

Joe: "Warren has clearly stated that the Government is the money monopolist in our system."

Yes, CR disputes that rationale and provides an alternative to the state theory along horizontalist lines.

Joe: "The price we pay in jobs isn't necessary, but is a function of the political choices we make. We can make all the new jobs we want if only we appropriate the money, to do that. MMT is clearly saying that we could have the benefits of importing more than we export, and provide all the jobs we need at a living wage."

Yes, but CR points out that this is not what Warren actually says. He just asserts that imports are real benefits. CR is not the only one to challenge this. Edward Harrison did, too. Marshall Auerback then qualified the assertion to, Imports are a benefit in real terms of trade at full employment.

JK said...

@Tom Hickey

You said "A monopolist controls supply therefore can control either price and letting quantity float or quantity and letting price fluctuate."

But what is the U.S.Gov controlling the supply of? This is Cullen's point (I think): the U.S.Gov DOES NOT control the supply of money in circulation.

I'm going to copy and paste my latest comment at MonetaryRealism below. Maybe you can respond to this:

"Actually.. maybe as Cullen suggests… “monopoly” isn’t the right word. The definition of a monopoly suggests that it has the power to control either 1) quantity supplied, or 2) price for sale …and let the other one float.

A true monopoly can choose either at any given time, but not both. But the U.S.Gov can not choose either. it can only choose #2 (price for sale).

I think what this means is that both MMR and MMT are correct and incorrect, but in subtle ways. MMR is correct that the U.S.Gov is not a true monopolist. But MMT is correct that the U.S.Gov has a particular monopoly power at its disposal.

The confusion lies in that MMT calls the U.S.Gov a monopoly issuer of currency, and that is incorrect. BUT, even if that is incorrect, it doesn’t change the fact that the U.SGov does indeed have a particular monopoly power, namely: the ability to set a price for labor and allow the quanity of interested workers to float.

I’m not sure if there is even a word in the English language to describe that unqiue ability. Monopoly seems like the closest word to it. Actually, it would make sense we don’t have a word for it because this “sovereign currency issuer” notion is a relatively new concept (as far as I know)."

Anonymous said...

"I know I'll have to say it 1000 more times, but if you can't get a job when the UE rate is 4%, it's because you are mentally ill in some way."

This is a disgusting comment, and reeks of privilege. Have you read any literature at all on unemployment and labor markets? The black unemployment rate is consistently higher than whites, even in boom times. Is there an added percentage of mentally ill people in the black community? Discrimination and environment matter a lot.

And why should the mentally ill not have access to a job if they want one?

Tom Hickey said...

The government controls the supply of currency (reserves and cash) which only the government (consolidating Treasury and cb can produce. Under the present system in the US, the govt cannot control the quantity of reserves due to the cb's LLR function, but it can control the price (interest rate), which influences the demand for credit, hence how the quantity of reserves fluctuates.

MMR is incorrect that the government as currency sovereign is not a true monopolist. Every monopolist gets to decide how it will use its monopoly power, and the US govt does this. It could change how it does this at any time due to a change in the political winds. It could even effectively forego this power by adopting a convertible fixed rate system such as the gold standard as it has in the past. But it remains free to end that overnight, as it also has in the past.
A government has absolute power over its currency and it may choose to exercise it, e.g., by not permitting private banking and creating money only by direct issuance.

Moreover, CR is focusing on the US in most of his argument. MMT is not limited to the US and, in fact, it is being pitched with varying degrees of success in other countries, whereas it is just beginning to become marginal in the US.

Looking at MMT in US-centric terms only is mistake in my view, in that it is overly narrow. In fact, the US may be the last nation to pick up on it. The first large nations that do are going to win the global race.

Anonymous said...

"...the U.S.Gov DOES NOT control the supply of money in circulation."

It's a terrible state of affairs when MMT is accused of claiming that the US could ever control something as amorphous as "the money supply." (Additionally, proper MMT'ers would be very specific about what 'money' means in this context). MMT belongs in the tradition endogeneous theorists, and of course recognizes that the money stock is mostly determined by demand-side factors.

Anyways, in basic microeconomics, the monopolist has perfect knowledge of the market demand curve for the product it has a monopoly over, and can set either price or quantity to maximize profit. I agree, JK, that the definition Warren uses is different from the textbook definition where a monopolist can control quantity. It's not particularly helpful in understanding the US gov't. The dynamics are very different, but the gov't remains the monopoly supplier of dollars and reserves.

Tom Hickey said...

@ Mike S

I'll repeat what I just wrote above, since it answers your comment about why support a JG when it is a political loser in the US.

Here is what I wrote:

MMT is not limited to the US and, in fact, it is being pitched with varying degrees of success in other countries, whereas it is just beginning to become marginal in the US.

Looking at MMT in US-centric terms only is mistake in my view, in that it is overly narrow. In fact, the US may be the last nation to pick up on it. The first large nations that do are going to win the global race.


I am not US-centric and neither is MMT. At least some MMT economists are advisers to other countries, and a contingent of MMT economists advised the Chinese on MMT 15 years ago. I agree that the US is unlikely to get it. That's going to be a big problem for Americans in the future.

Tom Hickey said...

"But what is the U.S.Gov controlling the supply of?"

A currency sovereign by definition controls the amount of currency it creates. It has the choice of either setting quantity and letting price (interest rate) fluctuate, or setting price and letting the quantity fluctuate. By choosing to allow the cb to be the lender of last resort, the government foregoes the first option, setting quantity and letting price fluctuate.

Instead, the present option is to set price (interest rate) and let the quantity float in relation to the amount demanded at different interest rates. Remember that Paul Volcker jacked the interest rate up to the high double digits, choking demand for credit and greatly increasing saving. Conversely, the Fed has set the rate to near zero and flooded the interbank system with reserves by buying tsys for its book in order to stifle saving and spur the demand for credit.

JK said...

Tom,

Thanks for the response. Well said.

JK said...

So the U.S.Gov chooses to set price (the interest rate), and allows the quantity of the money supply to float…

But it could set the quantity of the money supply, and let the price (the interest rate) float? (something seems odd about this)

Tom Hickey said...

Yes, by ending the cb as LLR, which more than a few now advocate to control the endogenous money supply, although no MMT'ers as far as I know, the government could set quantity and let the price (interest rate) float based on fluctuating demand for a fixed supply of reserves-currency. Deposits would not longer create reserves and banks would have to compete for a limited amount of reserves driving up rates when demand for credit rises.

Tom Hickey said...

Like in QE, the Fed chose to set quantity, e.g., announce purchases of 650B, and let price (yield) fluctuate, but it could have set the price (yield) and stood ready to purchase the quantity needed to maintain that price. It likely would not have had to do much, since the market knows that the Fed has the capacity to do this merely with keystrokes.

JK said...

Tom,

Thank you for those comments. They have helped me better understand how the U.S.Gov is a monopoly supplier of currency. I'm not a 100% concvinced, but the more I think about it the more I think that you are correct: the U.S.Gov does indeed have the option to either set price or set quantity supplied.. and allow the other one to float.

And if it has the option to do either, that sounds exactly like what a monopoly "is" and "can do."

Tom Hickey said...

Also consider how the Fed hits its target FFR in the overnight bank market by adjusting the quantity of reserves through OMO if it doesn't set the rate to zero or pay IOR.

If it did not do this then excess reserves would drive the fate under the target rate and if it did not set a ceiling with the penalty rate at the discount window then the rate could exceed the target if reserves were tight.

beowulf said...

"Is there an added percentage of mentally ill people in the black community? Discrimination and environment matter a lot."

Untreated mental illness? Probably so, for precisely the reasons you state. I've written elsewhere that MMT should focus on funding universal Medicare.


"And why should the mentally ill not have access to a job if they want one?"
Even with proper medical attention, some people are incapable of working to support themselves because of physical or mental disability. That's why we have Social Security disability pensions (which we should ensure provides the equivalent of a living wage).

I think Mike's point was at 4% or less U3, its doubtful there's a large cohort of workers who are both incapable of finding private employment and capable of working a public sector job. By no means was he suggesting they be put on an ice floe and pushed out to sea (I don't think he was anyway). :o)

Anonymous said...

"if you can't get a job when the UE rate is 4%, it's because you are mentally ill in some way."

Of course this claim is patently false so shouldn't be taken seriously. There are other points that the commenter should take into consideration however:

1. The US has hardly ever had only 4% unemployment within recent decades. Even if better policies were to be enacted, there will still be times when unemployment rises above this level.

2. NAIRU is a highly imprecise and wasteful policy. It typically entails higher unemployment than is theoretically strictly necessary to control inflation.

3. Government effectively creates unemployment as a by-product of its attempts to control inflation. As the root cause, it seems to follow that it should also provide a solution. JG offers a solution which allows government to control inflation as it does now, whilst eliminating the need for unemployment.

2. Potential for hysteresis - i.e the "natural rate" of unemployment can grow over time as the result of persistent unemployment.

3. Unemployment, especially long term and inter-generational, contributes to mental health problems, as well as other psychological and social problems such as crime, family breakdown, poor physical health, low self esteem and low aspiration, loss of skills (human capital), lower educational attainment, etc.

4. A low rate of overall unemployment can mask a much higher rate of unemployment within specific groups or different geographical locations. Average unemployment rates typically mask higher unemployment rates among different ethnic groups, the young, etc. Unemployment figures usually also misrepresent the true level of unemployment as well as wider pervasive underemployment.

Anonymous said...

I added some additional points without changing the numbers!

Anonymous said...

"I have no idea why Cullen thinks the existence of the horizontal sector means that the JG cannot work."

He aim is to depict MMT arguments for the JG as being based solely on moral and subjective grounds rather than economic ones.

This is the whole purpose behind his confused attacks on MMT views regarding currency monopoly, etc.

He wants to get to the conclusion that MMT arguments for the JG are purely normative. Having reached this point he can then make his transparently false claim that 'MMR' is only concerned with obective analysis and has no inherent policy prescriptions or political bias, whereas MMT is inherently political.

What he ignores is the fact that refusing to actively promote solutions to real economic and social problems is just as political as doing the opposite.

Having made his little 'argument' (rhetorical sequence of illogical non-sequiturs) he then typically goes on to imply that oppressive statist urges underlie MMT policy prescriptions, and that in contrast the current system is set up more as a kind of distributed network of power - which by implication is better.
JG therefore equals statist (socialist) oppression whereas anti-JG means checks and balances freedom or some such nonsense.

Anonymous said...

"I have no idea why Cullen thinks the existence of the horizontal sector means that the JG cannot work."

He aim is to depict MMT arguments for the JG as being based solely on moral and subjective grounds rather than economic ones.

This is the whole purpose behind his confused attacks on MMT views regarding currency monopoly, etc.

He wants to get to the conclusion that MMT arguments for the JG are purely normative. Having reached this point he can then make his transparently false claim that 'MMR' is only concerned with obective analysis and has no inherent policy prescriptions or political bias, whereas MMT is inherently political.

What he ignores is the fact that refusing to actively promote solutions to real economic and social problems is just as political as doing the opposite.

Having made his little 'argument' (rhetorical sequence of illogical non-sequiturs) he then typically goes on to imply that oppressive statist urges underlie MMT policy prescriptions, and that in contrast the current system is set up more as a kind of distributed network of power - which by implication is better.
JG therefore equals statist (socialist) oppression whereas anti-JG means checks and balances freedom or some such nonsense.

Trixie said...

Anonymous says: "Trixie, I've seen you trolling these websites before..."

YES!!! Remember the name, you'll hear it again.

Beowulf says: "By no means was he [Mike S.] suggesting they be put on an ice floe and pushed out to sea (I don't think he was anyway). :o)"

That's up for debate. The ONLY thing we know is that Mike S. wants to FIND "them". Through ebay of course, but it's unclear what he wants to do with "THEM" once he does:


"Morgan! Great idea!

I don’t know if I am actually a total fan of it, but I find this awesome:

“And the FORCE Guaranteed Income recipients into the system

In two years time the 5M despicable bottom feeders out of 30M have been FOUND.

There they are!”

This is one of the problems with any JG program – bottom feeders. I think they have serious mental health issues, and I’d imagine a vast majority of people who are making minimum wage have some decent amount of problems which prevent them from being useful to the world."

_____________________

Let me repeat: a vast majority of people who are making minimum wage have some decent amount of problems which prevent them from being useful to the world.

As he heads off to his "day" job to make money off of money, declaring everyone else "bottom-feeders" if they are not doing the same thing.

Letsgetitdone said...

Tom,

"". . . First, MMT is a not a concept. It is a conceptual approach which includes concepts, propositions, identities, and theoretical statements"

"I am summarizing CR's objections as I understand them. In brief, he asserts that the way MMT economists use "MMT" as a label is ambiguous at best and appears to be inconsistent. He believes he has provided textual evidence."

I understand, Tom, and I was critiquing CR's claim of ambiguity. Cr's problem is that he accepts two distinctions which have been rejected in philosophy of science over the past 60 years. The first is the distinction between theory and fact. The second is the distinction between the normative and the descriptive. CR promised to separate both in MMR texts. Not only has he failed to do this, but, as I recall, the failure was visible in their very first posts, has continued since, and is now visible in the post under discussion now, which certainly combines theory and fact, and the normative and the descriptive. In short, it's not that the MMT position is ambiguous; it's just that it reflects a different position on what the MMT approach is and what it includes. In addition the MMT position on this is much more in line with contemporary philosophy of science than Cullen's which seems to reflect early 1950s logical empiricism, long abandoned by POS.

"Joe: "Warren has clearly stated that the Government is the money monopolist in our system."

Yes, CR disputes that rationale and provides an alternative to the state theory along horizontalist lines."

I know that they do, but they have claimed Warren's mantle for their doctrine through this quote "As Warren Mosler has said, "deposits create reserves,"" and then turn around and say his monopoly theory of money is wrong. There's nothing wrong with that per se, one can easily say that Warren is right a, but wrong about b. However, when you do that it's your obligation to show the logical contribution between the two statements. This, MMR has failed to do.

I'll cover the third point in a separate comment.

Letsgetitdone said...

Tom, continuing my discussion on the three points of CR.

Joe: "The price we pay in jobs isn't necessary, but is a function of the political choices we make. We can make all the new jobs we want if only we appropriate the money, to do that. MMT is clearly saying that we could have the benefits of importing more than we export, and provide all the jobs we need at a living wage."

Yes, but CR points out that this is not what Warren actually says. He just asserts that imports are real benefits. CR is not the only one to challenge this. Edward Harrison did, too. Marshall Auerback then qualified the assertion to, Imports are a benefit in real terms of trade at full employment.

Both CR and Ed are both wrong about this. I raised the issue originally with Warren, after first reading his book and reviewing it in December of 2009 in this piece: http://www.correntewire.com/myths_scares_lies_and_deadly_innocent_frauds_part_three

I lay out the issue, critique Warren's position and then summarize with:

"To the extent that, because of imports, we lose the capability to manufacture certain materials and products, and need to rely on other nations that may not be friendly to us for these in times of conflict, we allow these imports to hurt our military self-sufficiency and also, perhaps our industrial self-sufficiency. While I haven't studied this link between imports acquired on credit, and a declining industrial foundation for supporting military capability, closely, I have the impression that the trends since the 1980 have been toward increased external contracting of military production, and the weakening of our industrial base in national security-related areas of manufacturing. In addition, the more the industrial capacity to make computer chips and other products is shifted overseas, the more reliant we are on continued favorable trading relationships with other nations who may not always be friendly, to maintain our own economy."

Warren replied to to the post with this comment: http://www.correntewire.com/myths_scares_lies_and_deadly_innocent_frauds_part_three#comment-156861 where he says:

"I do address the issue of resources of strategic importance and, for example, propose that all steel used by the US military be produced domestically. rather than imposing general import restrictions.

Also, there is an updated draft at www.moslereconomics.com "

So, I think Warren acknowledged that point and committed to it in December of 2009 at least, and then again during the discussion at the Fiscal Sustainability Conference in April of 2010, but I need to find the reference for that.

Btw, the comments on that old post of mine also included quite a few by one, tjxfh! Pretty good comments on the issue.

So, not to put too fine point to it, I think all of Cullen's claims under your points 1, 2, and 3, are invalid if you look closely at what the MMT people have written and if you use a more up-to-date conception of the nature of conceptual frameworks.

Letsgetitdone said...

Mike @May 2, 2012 12:15 AM

Thanks your opinion, but if you'll forgive me I'd like a little more back-up for your judgments about political feasibility before I'm persuaded. I doubt that your crystal ball about the political is going to develop is better than anyone else's here. None of us know how the political will change in the coming years, and none of us know whether any parts of the MMT policy program will be feasible or not. So you can say it 1000 times or 10,000 times, but repetition won't make it true, and statements about people being at fault if they can't get a job with a 4% unemployment rate won't earn you credibility. That only shows that you really don't care about the people who are paying the price for inflation control.

Tom Hickey said...

Agree, and at the same time, I think that they call for rebuttal rather than ad hominems, as he has rightly complained.

This is important because MMR is presenting the only informed debate with MMT so far. Most of the other "debates" have been with people that either misunderstand the present monetary system from an operational perspective, or have a very limited understanding of MMT and attack a straw man.

We should take the points that MMR raises seriously, in that they are areas of potential misunderstanding, on one hand, or disagreement, on the other. These kinds of issues are not going to be restricted to MMR as MMT gets more traction, as it is presently doing. MMR is doing MMT a favor by forcing MMT'ers to clarify their positions.

The one areas that I think CR has a valid point is exactly what the MMT label stands for. Here, I think that Scott Fullwiler has lead the way with the distinction of theory, policy, strategy, and tactics.

In fact, I think there is a paper waiting to be written on this. I would suggest that it be run by all the MMT economists and adopted as a position paper. Lacking this, there is inevitably going to be some confusion lurking about "MMT."

Tom Hickey said...

Joe: "So you can say it 1000 times or 10,000 times, but repetition won't make it true, and statements about people being at fault if they can't get a job with a 4% unemployment rate won't earn you credibility. That only shows that you really don't care about the people who are paying the price for inflation control."

I think that there is an element of truth in what MS says about unemployability. I have written to the effect myself, saying that mental illness is a prevalent structural problem in the US as well as cultural entrapment, affecting not only minorities.

But it is necessary to put a number on it. I am skeptical of pulling a % out of a hat without facts to back it up. I would estimate that the number may be in the millions, but how many I don't know and I don't know whether anyone does.

I have some experience with the homeless, and it is a complicated issue. When governor of California, Reagan correctly chose not to lock up people that are no danger to themselves or others, but putting them out in the street was not the right solution either. A lot of these people need more attention, even in a rather benign climate like CA.

Then there is the issue of endemic poverty that has become cultural. It's virtually impossible to break out of this loop. We need to recognize that and deal with it intelligently rather than ideologically. The answer is not just blaming the victim or ignoring the problem, or just throwing money at it either. It's a knotty issue that is not easily solved without sustained attention and commitment.

The JG is for those willing and able to work. Not all willing are able, and not all able are willing. There should be handicap measures for the former, and programs to overcome the latter rather than just blame it on "laziness." As an advanced society, the US is not handling this at all well, and the problem has become chronic as a result.

geerussell said...

For the most part I have trouble with the idea of looking at the JG as a tool to address the mentally ill. I think a primary reason they're out on the street being counted as part of the homeless or unemployed problem is for lack of provision of mental health care services.

In so many states mental health care has been eviscerated. I think if we fix health care in general and mental health care provision in particular that a lot of the issues related to finding jobs for the mentally ill go away as more of them get the help they need.

Tom Hickey said...

The point is that many of these people actually want to work (willing but not able). For example, my wife was managing a shop for one of our friends for a while, and some homeless people would come in and volunteer to work for free just for something useful to do.

Others were actually pretty employable and even skilled, and we did use them for various jobs like painting, cleaning and fix up. They were OK for "loose" employment, but they were unstable and couldn't be counted on to show up for work on a regular basis, not because they were "lazy."

geerussell said...

The point is that many of these people actually want to work (willing but not able).

What I was trying to get at, for the mentally ill, is that if we weren't failing them at the level of health care a lot of them would have the support necessary to manage their conditions and be more employable.

Or in the cases where the condition is too severe for employment, in-patient care as opposed to sidewalks, jails and greyhound therapy.

I certainly didn't intend to imply they were lazy or anything of the sort.

Letsgetitdone said...

Tom@11:58

"The JG is for those willing and able to work."

That's right and I think Randy is very clear about that the definition FE involved applies to those who are willing and able to work. So when Mike says 4% in disagreement with MMT prescriptions, then I presume he means 4% of those willing and able. If he means that 2% of the 4% are unable and he means, further, that 1% of the 4% are voluntarily transitioning so that he's really on talking about a 1% unemployment target then this is a different kettle of fish than 4%, and Mike should be explicit that it's what he has in mind.

But I think he hasn't said this because it's not what he has in mind. What he has in mind, is that you're among the 4% UE than it's just because you're too lazy to fight with the other 96% willing and label people who were able to get jobs. So you're UE is your fault, rather than the fault of the system which is implementing a 4% UE buffer stock.

Letsgetitdone said...

Tom,

"Agree, and at the same time, I think that they call for rebuttal rather than ad hominems, as he has rightly complained."

First, I don't think he's "rightly complained" since, in my view, his initial blog points on these differences contained plenty of ad hominems, labeling, straw-manning and uncivil remarks. This was especially true in his replies to rebuttal comments.

In my view, you get what you give, and the incivility he received was in great part stimulated by his own incivility.

Second, I've replied with plenty of specific rebuttal with quotations to the things that CR wrote about MMT and MMR's differences with it in this lengthy series: http://www.correntewire.com/the_job_guarantee_and_the_mmt_core_series


In return, I received some rebuttal from him. But not much and not in the form of any detailed textual analysis of the many points I've made against his positions. Also, once Cullen began to delete some of the comments on his site, reject others that had been placed under moderation, create straw men to characterize MMT positions, and also throw MMT commenters off his site. I decided that it wasn't possible to get a fair shake in discussions at MMR. So, I've restricted to commenting on MMR positions here, where I know I'll get a fair shake.

Mike S said...

"Have you read any literature at all on unemployment and labor markets? The black unemployment rate is consistently higher than whites, even in boom times. "

Look at the lead levels for the black community and tell me I am incorrect about widespread mental illness among the unemployable.

http://www.ricknevin.com/uploads/The_Bell_Curve_behind_The_Bell_Curve.pdf

We systematically poisoned the black community in the United States for the last 100 years. It's awful but true. Look at the maps of Chicago in the report listed and it's awful.

I've brought lead poisoning more than anyone in the MMT/MMR world, because I am the only one who has brought it up at all.

I've mentioned it at least 3 times in the last year. I think it's a huge issue in the united states. We have a lead poisoning problem and just because it's going away slowly does't make it gone. We have to deal with this for 50 more years at least.

The solution for some problems isn't "a job".

Let me assure you I did not grow up with much at all and have seen more racism and discrimination first hand than just about anyone. I haven't addressed racisim in my writings because I didn't know how to address these issues in a sensitive and proper way. The discrimination faced by blacks in the U.S. is far worse than in the U.K.

Note: I grew up in Lake county indiana, which is widely regarded as one of the most polluted places in the United States, and not far from the worst parts of the map you see in Rick Nevin's Chicago maps.

Here's a good quote from wikipedia: http://en.wikipedia.org/wiki/Calumet_River#Pollution_in_the_Grand_Calumet

"The National Bureau of Standards and Technology (formerly the National Bureau of Statistical Standards) at one time would scoop up the canal bottom muck, dry it out, and sell it as a testing powder for spectrometer testing, because the contaminated sludge has the widest number of chemical compositions most evenly distributed throughout the canal bottom of any polluted site in the United States.

The largest extent of the river's impairment comes from the historical sediment contamination by the industrial activities already mentioned. Today, sediments on the river bottom are "among the most contaminated and toxic that have ever been reported."

That's where I grew up: Da Region. Privilege. That's me - I got to grow up in one of the most polluted places on the planet. Silver spoon in my mouth, yep. My summer job in college was: relining steel mill furnaces. The coil pickling tanks were the worst, you had to throw away your clothes after 3-4 days, because it was acid in the brick I was tearing out with a jackhammer.

Actually, I was one of the lucky ones because I had a job. You need to know that 50,000 able bodied men were put out of work in the south side of chicago when we decided to let japan take away the steel trade from the U.S.

Why do you think I am so adamant about the trade deficit? Because I've seen the devastation allowing the trade deficit to be out of control first hand. I grew up in a place where the unemployment rate was like Spain today.

Anonymous said...

Mike, totaly agreed on the trade deficit.

"they call for rebuttal rather than ad hominems"

Ad hominems call for ad hominems in return, sad but true.

Anonymous said...

"the govt CAN exert lots of powers. But the system is designed not to allow these powers to be exerted. The govt CAN drop nukes on my house. It CAN chop your head off. Of course, there are checks in the system to avoid this tyranny. The USA is designed with a pvt banking system that disperses the power of money creation away from the state. It just is what it is."

- Therefore there is no rationale for the JG.


Thank god, because the JG's kind of like having nukes dropping on your house or getting your head chopped off.


But thankfully banks are there to protect us from such "bringing the state back to centre stage" tyranny.




Seriously, this guy is a flipping retard.

Matt Franko said...

Hey Mike S.,

"40 "And, answering, the King shall be declaring to them, 'Verily, I am saying to you, In as much as you do it to one of these, the least of My brethren, you do it to Me.'" Mat 25:40

I think you need to further clarify your position on how to employ "the least of us" if they want to work.

You're not looking too good right now "in my book"... think about it.

Resp,

Anonymous said...

Letsgetitdone:


The "full employment and price stability paper by Paul Davidson refers to the govt as the monopoly supplier of *its* money, or *its* currency.

Pavlina's paper refers to the govt as a "money monopolist" of the money it demands in payment of taxes.

Wray has argued in the past that "money" as the unit of account, or "money" as an institution, is a "public monopoly" - and distinguishes this from what he calls the particular "money-thing" such as currency or credit.

Easy to see why people get confused about all this.