An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
I'm not trying to shoot down the core insights of MMT. In fact, I find them extremely valuable to my reporting and analysis.
But there are some statements coming out of MMT that are highly misleading or confusing to people. Much of this confusion stems from the impression people get reading MMT blogs and papers that saving requires deficit spending. This is wrong, of course. But many smart, intelligent folks think this is what MMT is claiming.
So they dismiss it as nonsense.
What I've been trying to do is explore what it is that makes people think this is an MMT claim and what must be said to clarify it.
Furthermore, I do think there's a problem with MMT that cannot be confined to confusion.
The problem is as follows: MMTer are so focused on sectoral balances and the interaction between the private domestic sector and the public sector that they often downplay the intra-sector dynamics.
Finally, MMTers do not seem to fully appreciate the problems of ignorance and calculation that inform Austrian economics. They seem to recoil at even thinking about them because of the implications for the limits of political action. This also needs to be corrected.
My position remains that Keynesians and MMTers simply do not want to understand economic calculation because once its importance is conceded, Keynesianism implodes into the nonsense that it is.
the problems of ignorance and calculation that inform Austrian economics
Mr. Franko: Considering that I have explained this simple concept perhaps 50 times in these comments, it's quite bizarre that you still fail to follow the argument (which is not the same as agreeing with it).
People are economically ignorant in the sense that they do not and cannot know what other people need and want except by observing how much they will actually pay for what. Socialism prohibits trade and thus abolishes the source of that crucial and essential information. Keynesianism and monopoly fractional reserve banking distort that process by distorting the pricing process which is the cause of the boom/bust cycle and malinvestments in general. All of the economic problems which MMTers presently complain about are caused by distortions of the pricing process by fiat funny money, a process completely, meticulously and purposefully ignored and suppressed by MMTers. I constantly note that it is completely missing from all Minsky-ite analysis too because it must be.
That is why monstrous liars like “Lord Keynes” and Pilkington and DeLong and Krugman always fail to mention that essential central concept in their inept and dishonest critiques of Austrian analysis. Like here:
"Much of this confusion stems from the impression people get reading MMT blogs and papers that saving requires deficit spending. This is wrong, of course. But many smart, intelligent folks think this is what MMT is claiming."
The people making the mistakes are the people like John Carney that write things about what MMT folks are saying, but are wrong.
MMT (arithmetic) says that saving in the aggregate…net saving of state money is not possible without deficit spending.
Otherwise, saving will always be at the expense of someone else.
Stick with that. Such a simple, self evident idea.
The MMTers are certainly correct when they observe that "private saving net of private investment" can't grow without a government budget deficit (again if we disregard foreign trade). But so what? The whole benefit of private saving is that it allows for more private investment.
Seems Mosler will/should get a question regarding Autrian concepts like 'Economic Calculation' and whatnot. Will be interesting to see how he responds.
"Stick with that. Such a simple, self evident idea"
Obviously not for you, Bob.
!The MMTers are certainly correct when they observe that "private saving net of private investment" can't grow without a government budget deficit (again if we disregard foreign trade)"
MMT doesn't ignore foreign trade, so another straw man.
"But so what? The whole benefit of private saving is that it allows for more private investment".
Actually, in reality private investment creates private savings.
" Socialism prohibits trade and thus abolishes the source of that crucial and essential information. Keynesianism and monopoly fractional reserve banking distort that process by distorting the pricing process which is the cause of the boom/bust cycle and malinvestments in general."
All dependent on the idea that REAL WORLD prices are set by the private sector in a flexible manner and moved by human action towards their market clearing levels.
But most prices are fixprices and the private sector does not set them in this manner at all.
Fixprices are not being distorted away from their market clearing values, because they were NEVER SET THAT WAY IN THE FIRST PLACE, and fixprices are generally inflexible anyway with respect to demand.
Roddis has long since proven he is a prize idiot and ignoramus, and that he doesn't even understand the definition of market clearing price:
"I do not like the term “market clearing prices”. I don’t use it and I do not think it is particularly helpful in understanding reality. When I see the term used, my reaction is always “WTF are you actually trying to say”?"
I just saw it. They were both talking past one another. Murphy couldn't pick fights with Mosler but he rejects the very idea of a government so no space for compromise.
Mike Norman incident was unfortunate. Murphy was attacking but tried to keep things light and friendly.
I was disappointed the debate wasn't more layperson friendly. It's not something I can share with friends of mine as a crash course in Austrian vs. Keynesian economics and public policy prescription. Too technical (Mosler) and too abstract (Murphy)… which sort of gets to the point of the disagreement: MMT is about understanding current operations and how best to utilize them for XYZ goals, and Austrian economics is a fantasyland describing a different economic system, and therefore their policy prescriptions our silly given our current institutional arrangement.
Still somewhat interesting. Don't think I learned anything new from either of them.
I think Warren did exceedingly well and responded and took advantage of the 'looseness' of the debate. I think Murphy was all over the place. And he really didn't have an answer for operations. Warren took him to task on the fixed vs. floating fx distinction, as previously discussed, and corrected Murphy on numerous points that he misrepresented. Frankly, I don't think people that can't get what's real have any business telling us what should be. We have no reason to believe that they've got that right. The Austrians are applying fixed exchange rate thinking to a floating environment, what else are they going to screw up? Tonight from Murphy we got an admission that MMT is 'technically' correct, but that he's worried it could lead to overspending, and he objects to the coercive tax system that 'drives' the currency. It's like um...ok? So let's cut the regressive, punishing payroll tax and demand the proper restraints on the 'designated agents' of the government. What's wrong with that? Are they seriously going to make opposition to the principle of taxes, in general, form the basis for an objection to the largest tax cut in American history? And what's wrong with reducing distortive government 'interference' in the financial sector?
I think It was very good debate. It was nice from Murphy to introduce Austrian point of view at the very beginning. Mosler made some very good analogies. For example: what is the interest rate on subway tokens? So It came out that interest rates are kept artificially high, not low like Austrians claim. Another good analogy was the plastic bag over runner's head. Do Austrians really advocate for such high level of taxes for given government spending and credit conditions?
Murphy was trying to assert at the end that MMT is really too advocating a different set of rules to operate under (in other words MMT is a fantasy) and Mosler responded to that.
Of course there are gold bugs and government haters who refuse to understand, but I think over all MMT position was clearly communicated and It was shown that Austrians are part of the problem because they talk about a dream and apply those principles to reality (taken from a dream). I thought Murphy was going to talk about generations and how next generation has to give goods and services to the one that deficit spent (like he has been arguing on the internet), but he didn't do that. I hope this Will be on youtube so I can post It on my blog.
The problem with Austrians is they live in an alternate reality, they don't speak the same language of the rest of the humanity neither perceive things the same way. Yet they give lessons about how things are or should be like if the rest were just brainwashed idiots.
But when it comes to reality, anyone with real expertise as a businessmen and in finance (because let's not lie here, in such discussions we are always talking about money, not about real output; the problem is Austrians take Say's law for granted which leads them to all sort of trouble, just like neoliberals take stuff like ISLM or NAIRU for granted, although the last may be more cynical in nature when adopting these models) will turn off most of their upside-down arguments.
We are not interested in metaphysics or morality here, and sticky ideologies don't have much to offer in terms of insight. Building fallacious arguments with pretty words while failing to provide experimental proof of your arguments does not give any insight. And building arguments around an imaginary set of rules which do not apply to the real world do not give any insight or wisdom.
My suggestion is: go to a freaking island and build your paradise there, isolated from the world (not leeching from the rest of the world productive as a shady tax heaven), and try out experimentally your theoretical claims. Until then, no one gonna take you seriously.
"The problem with Austrians is they live in an alternate reality, they don't speak the same language of the rest of the humanity neither perceive things the same way. Yet they give lessons about how things are or should be like if the rest were just brainwashed idiots."
But that's only how they communicate their ideology. They do live in very much reality. Bob Rodis is a a lawyer who makes a living out of government coercive rules and he knows society cannot exist without those rules. Yet he talks like he believes It can. Their whole theory serves really neoliberal purpose where government is directing resources and giving power to very few in society. They play It out like those very few really deserved It. That is why they are so upset when you show how system works. When you show that there is no free market and there never was.
Murphy said at the end that if the government chooses to set interest rates too low then no one wants to hold that currency/the currency would be destroyed. He pretty much destroyed the Austrian position with that because in reality we see something else.
Bob Murphy said that MMT was technically correct and thus conceded the debate.
He entire position is that he doesn't like the way things are and so is uninterested discussing our actual economy.
Bob Murphy was totally defeated as he self reduced to the joke an island economist telling the scientist, and engineer the best way to open a can of food is to "imagine a can opener."
Will Bob Roddis ever shut up about the economical calculation argument?
The argument was a socialist argument against centralization that existed before the Austrian school even existed i.e. Bakunin, Kropotkin, etc...
The entire notion of rational economical calculation is flawed as hell and shown to be empirically incorrect.
Every time Bob cites this argument he proves that individuality among humans is quite rare which his argument ironically relies upon and thus the irrationality of his actions proves that his argument is false. Bob has no individual knowledge because everything he believes was put there by others and so far he has not demonstrated any ability to departed from his conditioning.
Real economists would take this as evidence of the commonality of human action when directed by conditioning and thus it quite possible to know everything that Bob is going do in this case and thus using the methods known to physical scientist on various physical fields to everything that Bob would do in an economic calculation because the reality is Bob conditioned as he is doesn't individually calculated anything at all.
He's simply the a "charged personality" in the social field and has no choice but falsely believes that he is actually a independent individual whose every thought is one of unique genius when the rest of us can clearly see that nothing could be further from the truth and are getting bored of the banality of all these self-appointed geniuses of libertarian economics who simply repeat the same things like mantras being the independent individualists that they are.
Quote: "Bob Rodis is a a lawyer who makes a living out of government coercive rules and he knows society cannot exist without those rules. Yet he talks like he believes It can. Their whole theory serves really neoliberal purpose where government is directing resources and giving power to very few in society. They play It out like those very few really deserved It. That is why they are so upset when you show how system works. When you show that there is no free market and there never was."
Exactly! Exposing the classist and bigoted nature of the system of property is a threat and thus Bob who self identifies with this system of aggression is compelled into ideological aggression against those who are deculting the truth and will lie and use deception to try and vilify those who illuminate the truth.
So in a sense, everything that Bob does is violence i.e. the violence inherent in defending a system classism, racism, and imperialism. Deception in service of a system of oppression and hate is violence against the good, the true, and the beautiful and thus is an evil not be debated.
Libertarianism is not to be debated. It is to be smashed.
I'm hopeful that the new Pope ,in coming encyclicals, will begin to bring heat on these anti-Christ, and anti-human doctrines of violent dehumanism.
"I'm hopeful that the new Pope ,in coming encyclicals, will begin to bring heat on these anti-Christ, and anti-human doctrines of violent dehumanism."
Sept,
Same here, cant wait to see this ...
BUT.... he has to get the authority correct imo... iow imo it cant continue just to be "redistribute the scarce metals more equitably thru charities..."
iow The Vatican, like the others, has to get past the 'gold standard mentality' and obtain the correct view of present monetary authority...
I have no current reason to believe they are going to receive this view... but would be pleasantly surprised...
I expect Francis to just come up with "more charity", which imo is a policy of complete failure, and a demonstration of near faithlessness actually...
"Mosler was discussing the actual world. Murphy was discussing an imaginary world."
The central and core event in economics is the voluntary exchange of goods and services by human beings at terms that are based upon their subjective preferences. That is also the foundation of Austrian analysis.
MMT, being based upon the idiotic and preposterous "state theory of money", does not even have a theory of relative prices and believes that "the economy" is a machine that must be managed by extraneous dickhead bureaucrats who are generally looting the public and planning to use the loot for the next war of aggression. Did I mention that MMTers have a four-year-old's naive view of the state?
So who is describing reality and who lives in a silly dream world?
So who is describing reality and who lives in a silly dream world?
Then way was Murphy recommending no state, no taxes and voluntary cooperation. Are you people that naive? You are going to declare a non-coercion rule and believe that everyone, domestic and foreign, will conform to it?
This imaginary reality is so absurd as not to merit a response.
Of course, I would love it if humanity were that evolved but it is not at present and there is little reason to think it will be in the foreseeable future. And by the time it is, contemporary conceptions of economics will be long obsolete
Just look around — wherever there is not a strong authority behind the rule of law there is rampant crime and war.
Austrian economics looks forward to returning to some "golden age" when people supposedly used bullion as money — the Mises "regression theorem." The Austrian idea of progress is regression, not development and evolution. It's a priori theorizing is based on wishful thinking rather than modern scientific method and fact.
Hayek was basically a social democrat on many issues. Libertarianism is not co-extensive with Austrian economics. Like always, you guys need to muddle up definitions and obfuscate about clear and well understood concepts like private property, fraud and assaultive behavior which Mosler verified is the foundation of MMT.
"MMT, being based upon the idiotic and preposterous "state theory of money", does not even have a theory of relative prices"
Priceless -- coming from a jackass and idiot who tells us he does not understand the idea of market clearing prices:
I do not like the term “market clearing prices”. I don’t use it and I do not think it is particularly helpful in understanding reality. When I see the term used, my reaction is always “WTF are you actually trying to say”?"
Bob Roddis said... - "The central and core event in economics is the voluntary exchange of goods and services by human beings at terms that are based upon their subjective preferences. That is also the foundation of Austrian analysis.o nice."
Not only does your definition completely ignore the institutional structure of human society but it is so vague as to be meaningless.
Not only are MMTers opposed to human freedom, they are so hell-bent on destroying the language that they cannot understand what the concept of human freedom even means. Part of the reason they are shameless is because they are oblivious.
Freedom is not just freedom "from" but the freedom "to".
For the Ancient Greeks freedom was the freedom to participate in government.
The idea that freedom means "freedom from government" is a perversion of the word. It is the freedom for the strong to do as they will and the weak as they must.
From this comes the redefinition of the term "free market" as a market free of government, the opposite its original meaning.
To classical economists a free market was a market free of unearned income - of economic rent.
"In order to expand markets and increase their economies’ competitive pricing position, classical economists sought to free their societies from the vestiges of feudalism—a landed aristocracy extracting land rent, and a banking class extracting interest and converting national debts in to the creation of monopoly trading privileges. Progressive Era reformers accordingly defined a free market as one with a government strong enough to tax away land rent and either break up monopolies or keep them in the public domain. The aim was to bring market prices in line with minimum necessary cost-value. This required a strong enough government to tax and check the vest ed financial, insurance, and real estate (FIRE) interests" - M Hudson.
Progressive Era reformers accordingly defined a free market as one with a government strong enough to tax away land rent and either break up monopolies or keep them in the public domain. The aim was to bring market prices in line with minimum necessary cost-value.
Nonsense. The "progressive era" was a contrivance for the robber barons to employ government as their protector.
The stage thus set by the failure of the merger movement, Kolko moves on to the myth that Progressive Era reforms were uniformly or even predominantly opposed by their affected industries. The key is to realize that, economic strategies like corporate consolidation having failed, companies turned to political strategies to freeze the status quo or to gain new competitive advantages. As Kolko states, "the essential purpose and goal of any measure of importance in the Progressive Era was not merely endorsed by key representatives of businesses involved; rather such bills were first proposed by them." Food companies, for example, wanted the Food and Drug Act so that they could turn its regulations against their competitors (e.g., oleo versus butter). Big meat packers desired to save their industry from tainted meat, which hurt business, but were unable to ensure the quality of small packers' meat and unwilling to pay for independent meat inspection--so they themselves initiated the meat inspection movement, lobbied for and won passage of the Meat Inspection Act, thereby forcing inspection onto the industry and its costs onto the federal government. As for the Federal Reserve Act, it was the product of a banking reform movement "initiated and sustained" by big bankers who sought to protect themselves from small bank competition. The Clayton Antitrust Act and the Federal Reserve Act? Most businessmen supported them to better protect themselves from antitrust prosecution under the Sherman Act's vague provisions or (among smaller businesses) to gain such advantages as enforced "fair trade price-fixing." Thus, Kolko shows that whether for protection from competition or from the government, businesses themselves initiated or shaped these Progressive Era reforms and others that most Americans regard as being part of an anti-business (or at least not pro-business) reform movement.
Roddis - "these Progressive Era reforms and others that most Americans regard as being part of an anti-business (or at least not pro-business) reform movement"
On the contrary the Progressive Era reformers were pro-business in the sense that they sought to increase America's international competitiveness, its productive power, its technology & prosperity.
Roddis - "... thereby forcing inspection onto the industry and its costs onto the federal government."
I agree that private regulation & inspection, whatever else it may do, adds to the cost of doing business.
But I'm not sure you've thought about the implications of this.
It implies that the Government, by appropriating the responsibility & cost of regulation & enforcement, lowers the cost of doing business. Restated: Privatization, particularly of basic infrastructure & monopolies, raises the cost of doing business, thereby decreasing a nations ability to compete internationally.
According to austrians is any exchange by private parties. This exposes the very low level and simpleton analysis that is Austrian economics. Ignoring that the world is a slightly more complex than they can comprehend or admit.
since humans have a physical presence, they must park the presence some where, yet according to VE rent is voluntarily if the government is absent .
I would rather not pay for gas. but i need gas to get to work. I need to work so I can buy food. I need food so I can live, But Austrians claim VE because only private parties are involved.
In contrast I have a little more choice when it comes to taxes. I could vote for politicians that tax and spend according to my beliefs. If all else fails I could always move, as living under any particular government is purely voluntary.
Lots of voluntary choices with hundreds of different governments in this world to chose from. Paying taxes and living under certain rules are a voluntary choice . In contrast there are very few refiners in the world to buy from.
Came across this blog while surfing the net. Intriguing. Have a look at this site which gives some pretty sold arguments against Austrian economics from an anti-statist anarcho-socialist perspective
45 comments:
John Carney said...
I'm not trying to shoot down the core insights of MMT. In fact, I find them extremely valuable to my reporting and analysis.
But there are some statements coming out of MMT that are highly misleading or confusing to people. Much of this confusion stems from the impression people get reading MMT blogs and papers that saving requires deficit spending. This is wrong, of course. But many smart, intelligent folks think this is what MMT is claiming.
So they dismiss it as nonsense.
What I've been trying to do is explore what it is that makes people think this is an MMT claim and what must be said to clarify it.
Furthermore, I do think there's a problem with MMT that cannot be confined to confusion.
The problem is as follows: MMTer are so focused on sectoral balances and the interaction between the private domestic sector and the public sector that they often downplay the intra-sector dynamics.
Finally, MMTers do not seem to fully appreciate the problems of ignorance and calculation that inform Austrian economics. They seem to recoil at even thinking about them because of the implications for the limits of political action. This also needs to be corrected.
http://mikenormaneconomics.blogspot.com/2012/03/john-carney-comments-on-jkhs-post-on.html?showComment=1332343882664#c370523094954810558
My position remains that Keynesians and MMTers simply do not want to understand economic calculation because once its importance is conceded, Keynesianism implodes into the nonsense that it is.
Bob,
How can "ignorance" yet "inform"?
What/who is doing the "calculating"? Invisible hand?
C'mon... rsp,
Bob,
You are free to barter. Get to it and stop complaining. Rsp,
Six
the problems of ignorance and calculation that inform Austrian economics
Mr. Franko: Considering that I have explained this simple concept perhaps 50 times in these comments, it's quite bizarre that you still fail to follow the argument (which is not the same as agreeing with it).
People are economically ignorant in the sense that they do not and cannot know what other people need and want except by observing how much they will actually pay for what. Socialism prohibits trade and thus abolishes the source of that crucial and essential information. Keynesianism and monopoly fractional reserve banking distort that process by distorting the pricing process which is the cause of the boom/bust cycle and malinvestments in general. All of the economic problems which MMTers presently complain about are caused by distortions of the pricing process by fiat funny money, a process completely, meticulously and purposefully ignored and suppressed by MMTers. I constantly note that it is completely missing from all Minsky-ite analysis too because it must be.
That is why monstrous liars like “Lord Keynes” and Pilkington and DeLong and Krugman always fail to mention that essential central concept in their inept and dishonest critiques of Austrian analysis. Like here:
http://socialdemocracy21stcentury.blogspot.com/2013/05/minsky-versus-abct.html
"Much of this confusion stems from the impression people get reading MMT blogs and papers that saving requires deficit spending. This is wrong, of course. But many smart, intelligent folks think this is what MMT is claiming."
The people making the mistakes are the people like John Carney that write things about what MMT folks are saying, but are wrong.
MMT (arithmetic) says that saving in the aggregate…net saving of state money is not possible without deficit spending.
Otherwise, saving will always be at the expense of someone else.
"Much of this confusion stems from the impression people get reading MMT blogs and papers that saving requires deficit spending".
No. NET SAVING.
"Keynesians and MMTers simply do not want to understand economic calculation"
You mean non-Hayekian, Misean/Rothbardian so-called "economic calculation"?
No. NET SAVING.
Stick with that. Such a simple, self evident idea.
The MMTers are certainly correct when they observe that "private saving net of private investment" can't grow without a government budget deficit (again if we disregard foreign trade). But so what? The whole benefit of private saving is that it allows for more private investment.
http://mises.org/daily/5260
Seems Mosler will/should get a question regarding Autrian concepts like 'Economic Calculation' and whatnot. Will be interesting to see how he responds.
"Stick with that. Such a simple, self evident idea"
Obviously not for you, Bob.
!The MMTers are certainly correct when they observe that "private saving net of private investment" can't grow without a government budget deficit (again if we disregard foreign trade)"
MMT doesn't ignore foreign trade, so another straw man.
"But so what? The whole benefit of private saving is that it allows for more private investment".
Actually, in reality private investment creates private savings.
" Socialism prohibits trade and thus abolishes the source of that crucial and essential information. Keynesianism and monopoly fractional reserve banking distort that process by distorting the pricing process which is the cause of the boom/bust cycle and malinvestments in general."
All dependent on the idea that REAL WORLD prices are set by the private sector in a flexible manner and moved by human action towards their market clearing levels.
But most prices are fixprices and the private sector does not set them in this manner at all.
Fixprices are not being distorted away from their market clearing values, because they were NEVER SET THAT WAY IN THE FIRST PLACE, and fixprices are generally inflexible anyway with respect to demand.
Roddis has long since proven he is a prize idiot and ignoramus, and that he doesn't even understand the definition of market clearing price:
"I do not like the term “market clearing prices”. I don’t use it and I do not think it is particularly helpful in understanding reality. When I see the term used, my reaction is always “WTF are you actually trying to say”?"
http://mikenormaneconomics.blogspot.com/2013/05/daniel-little-what-about-marx.html?showComment=1369144674917#c9135395801097278615
Bob Roddis said...
"That is why monstrous liars like “Lord Keynes” and Pilkington and DeLong and Krugman always fail to mention that essential central concept "
Yes, clearly I have never mentioned, discussed and critiqued the Austrian idea of economic calculation or coordination.
http://socialdemocracy21stcentury.blogspot.com/2013/05/misesian-economic-calculation-and.html
http://socialdemocracy21stcentury.blogspot.com/2013/03/salerno-on-misess-view-of-coordination.html
http://socialdemocracy21stcentury.blogspot.com/2013/03/mises-and-hayek-dehomogenized-note-on.html
http://socialdemocracy21stcentury.blogspot.com/2013/05/misesian-economic-calculation-and.html
------------
Jackass.
Hi I am Mike Norman. I stared at the sun for hours today and well, here I am.
....insults Bob Murphy and even Warren Mosler was confused
Both participants were gentlemen, unlike Mike Norman
thanks taco, your insight is much appreciated.
I just saw it. They were both talking past one another. Murphy couldn't pick fights with Mosler but he rejects the very idea of a government so no space for compromise.
Mike Norman incident was unfortunate. Murphy was attacking but tried to keep things light and friendly.
according to Murphy Austrian econ = no taxes (almost his very words).
so, parallel imaginary universe stuff on Murphy's part.
I was disappointed the debate wasn't more layperson friendly. It's not something I can share with friends of mine as a crash course in Austrian vs. Keynesian economics and public policy prescription. Too technical (Mosler) and too abstract (Murphy)… which sort of gets to the point of the disagreement: MMT is about understanding current operations and how best to utilize them for XYZ goals, and Austrian economics is a fantasyland describing a different economic system, and therefore their policy prescriptions our silly given our current institutional arrangement.
Still somewhat interesting. Don't think I learned anything new from either of them.
I think Warren did exceedingly well and responded and took advantage of the 'looseness' of the debate. I think Murphy was all over the place. And he really didn't have an answer for operations. Warren took him to task on the fixed vs. floating fx distinction, as previously discussed, and corrected Murphy on numerous points that he misrepresented. Frankly, I don't think people that can't get what's real have any business telling us what should be. We have no reason to believe that they've got that right. The Austrians are applying fixed exchange rate thinking to a floating environment, what else are they going to screw up? Tonight from Murphy we got an admission that MMT is 'technically' correct, but that he's worried it could lead to overspending, and he objects to the coercive tax system that 'drives' the currency. It's like um...ok? So let's cut the regressive, punishing payroll tax and demand the proper restraints on the 'designated agents' of the government. What's wrong with that? Are they seriously going to make opposition to the principle of taxes, in general, form the basis for an objection to the largest tax cut in American history? And what's wrong with reducing distortive government 'interference' in the financial sector?
I think It was very good debate. It was nice from Murphy to introduce Austrian point of view at the very beginning. Mosler made some very good analogies. For example: what is the interest rate on subway tokens? So It came out that interest rates are kept artificially high, not low like Austrians claim. Another good analogy was the plastic bag over runner's head. Do Austrians really advocate for such high level of taxes for given government spending and credit conditions?
Murphy was trying to assert at the end that MMT is really too advocating a different set of rules to operate under (in other words MMT is a fantasy) and Mosler responded to that.
Of course there are gold bugs and government haters who refuse to understand, but I think over all MMT position was clearly communicated and It was shown that Austrians are part of the problem because they talk about a dream and apply those principles to reality (taken from a dream). I thought Murphy was going to talk about generations and how next generation has to give goods and services to the one that deficit spent (like he has been arguing on the internet), but he didn't do that. I hope this Will be on youtube so I can post It on my blog.
The problem with Austrians is they live in an alternate reality, they don't speak the same language of the rest of the humanity neither perceive things the same way. Yet they give lessons about how things are or should be like if the rest were just brainwashed idiots.
But when it comes to reality, anyone with real expertise as a businessmen and in finance (because let's not lie here, in such discussions we are always talking about money, not about real output; the problem is Austrians take Say's law for granted which leads them to all sort of trouble, just like neoliberals take stuff like ISLM or NAIRU for granted, although the last may be more cynical in nature when adopting these models) will turn off most of their upside-down arguments.
We are not interested in metaphysics or morality here, and sticky ideologies don't have much to offer in terms of insight. Building fallacious arguments with pretty words while failing to provide experimental proof of your arguments does not give any insight. And building arguments around an imaginary set of rules which do not apply to the real world do not give any insight or wisdom.
My suggestion is: go to a freaking island and build your paradise there, isolated from the world (not leeching from the rest of the world productive as a shady tax heaven), and try out experimentally your theoretical claims. Until then, no one gonna take you seriously.
"The problem with Austrians is they live in an alternate reality, they don't speak the same language of the rest of the humanity neither perceive things the same way. Yet they give lessons about how things are or should be like if the rest were just brainwashed idiots."
But that's only how they communicate their ideology. They do live in very much reality. Bob Rodis is a a lawyer who makes a living out of government coercive rules and he knows society cannot exist without those rules. Yet he talks like he believes It can. Their whole theory serves really neoliberal purpose where government is directing resources and giving power to very few in society. They play It out like those very few really deserved It. That is why they are so upset when you show how system works. When you show that there is no free market and there never was.
Murphy said at the end that if the government chooses to set interest rates too low then no one wants to hold that currency/the currency would be destroyed. He pretty much destroyed the Austrian position with that because in reality we see something else.
Bob Murphy said that MMT was technically correct and thus conceded the debate.
He entire position is that he doesn't like the way things are and so is uninterested discussing our actual economy.
Bob Murphy was totally defeated as he self reduced to the joke an island economist telling the scientist, and engineer the best way to open a can of food is to "imagine a can opener."
Will Bob Roddis ever shut up about the economical calculation argument?
The argument was a socialist argument against centralization that existed before the Austrian school even existed i.e. Bakunin, Kropotkin, etc...
The entire notion of rational economical calculation is flawed as hell and shown to be empirically incorrect.
Every time Bob cites this argument he proves that individuality among humans is quite rare which his argument ironically relies upon and thus the irrationality of his actions proves that his argument is false. Bob has no individual knowledge because everything he believes was put there by others and so far he has not demonstrated any ability to departed from his conditioning.
Real economists would take this as evidence of the commonality of human action when directed by conditioning and thus it quite possible to know everything that Bob is going do in this case and thus using the methods known to physical scientist on various physical fields to everything that Bob would do in an economic calculation because the reality is Bob conditioned as he is doesn't individually calculated anything at all.
He's simply the a "charged personality" in the social field and has no choice but falsely believes that he is actually a independent individual whose every thought is one of unique genius when the rest of us can clearly see that nothing could be further from the truth and are getting bored of the banality of all these self-appointed geniuses of libertarian economics who simply repeat the same things like mantras being the independent individualists that they are.
Quote: "Bob Rodis is a a lawyer who makes a living out of government coercive rules and he knows society cannot exist without those rules. Yet he talks like he believes It can. Their whole theory serves really neoliberal purpose where government is directing resources and giving power to very few in society. They play It out like those very few really deserved It. That is why they are so upset when you show how system works. When you show that there is no free market and there never was."
Exactly! Exposing the classist and bigoted nature of the system of property is a threat and thus Bob who self identifies with this system of aggression is compelled into ideological aggression against those who are deculting the truth and will lie and use deception to try and vilify those who illuminate the truth.
So in a sense, everything that Bob does is violence i.e. the violence inherent in defending a system classism, racism, and imperialism. Deception in service of a system of oppression and hate is violence against the good, the true, and the beautiful and thus is an evil not be debated.
Libertarianism is not to be debated. It is to be smashed.
I'm hopeful that the new Pope ,in coming encyclicals, will begin to bring heat on these anti-Christ, and anti-human doctrines of violent dehumanism.
"I'm hopeful that the new Pope ,in coming encyclicals, will begin to bring heat on these anti-Christ, and anti-human doctrines of violent dehumanism."
Sept,
Same here, cant wait to see this ...
BUT.... he has to get the authority correct imo... iow imo it cant continue just to be "redistribute the scarce metals more equitably thru charities..."
iow The Vatican, like the others, has to get past the 'gold standard mentality' and obtain the correct view of present monetary authority...
I have no current reason to believe they are going to receive this view... but would be pleasantly surprised...
I expect Francis to just come up with "more charity", which imo is a policy of complete failure, and a demonstration of near faithlessness actually...
rsp,
I hope a link to the recorded debate will be up shortly.
So, Murphy doesn't mind government spending...but it's "coercive" for the government to take some of it back.
That's a very selective view of reality.
Then folks are clamoring for a balanced budget, where the government takes back all of it's spending...
Cutting spending will lower taxes...because in the aggregate there will be less income.
That's kind of like cutting off an arm or leg to make weight for a boxing match.
The cognitive dissonance here could give one whiplash.
bob, can you make some videos of yourself espousing your crackpot ideas so we can feature you on youtube?
Austrians 18,897 MMTers 0.
The route is on. Keynesians, you're next.
@ Steve
Clear that some people don't have the chops to understand the issues that were discussed.
Clear that some people don't have the chops to understand the issues that were discussed.
Right. The entire MMTer cohort in this solar system doesn't understand the first thing about Austrian analysis.
Mosler was discussing the actual world. Murphy was discussing an imaginary world.
"Mosler was discussing the actual world. Murphy was discussing an imaginary world."
The most succinct description of Austrian Economics I've ever read.
"Mosler was discussing the actual world. Murphy was discussing an imaginary world."
The central and core event in economics is the voluntary exchange of goods and services by human beings at terms that are based upon their subjective preferences. That is also the foundation of Austrian analysis.
MMT, being based upon the idiotic and preposterous "state theory of money", does not even have a theory of relative prices and believes that "the economy" is a machine that must be managed by extraneous dickhead bureaucrats who are generally looting the public and planning to use the loot for the next war of aggression. Did I mention that MMTers have a four-year-old's naive view of the state?
So who is describing reality and who lives in a silly dream world?
"does not even have a theory of relative prices and believes that "the economy" is a machine that must be managed"
Why do we need a "state theory of prices" when we have actual real-world prices that in fact most of us can afford to pay…for more stuff than we need?
So who is describing reality and who lives in a silly dream world?
Then way was Murphy recommending no state, no taxes and voluntary cooperation. Are you people that naive? You are going to declare a non-coercion rule and believe that everyone, domestic and foreign, will conform to it?
This imaginary reality is so absurd as not to merit a response.
Of course, I would love it if humanity were that evolved but it is not at present and there is little reason to think it will be in the foreseeable future. And by the time it is, contemporary conceptions of economics will be long obsolete
Just look around — wherever there is not a strong authority behind the rule of law there is rampant crime and war.
Austrian economics looks forward to returning to some "golden age" when people supposedly used bullion as money — the Mises "regression theorem." The Austrian idea of progress is regression, not development and evolution. It's a priori theorizing is based on wishful thinking rather than modern scientific method and fact.
Hayek was basically a social democrat on many issues. Libertarianism is not co-extensive with Austrian economics. Like always, you guys need to muddle up definitions and obfuscate about clear and well understood concepts like private property, fraud and assaultive behavior which Mosler verified is the foundation of MMT.
"The Austrian idea of progress is regression…"
In the world of physics, this is called a decay function…
…winding down to a stop.
"MMT, being based upon the idiotic and preposterous "state theory of money", does not even have a theory of relative prices"
Priceless -- coming from a jackass and idiot who tells us he does not understand the idea of market clearing prices:
I do not like the term “market clearing prices”. I don’t use it and I do not think it is particularly helpful in understanding reality. When I see the term used, my reaction is always “WTF are you actually trying to say”?"
http://mikenormaneconomics.blogspot.com/2013/05/daniel-little-what-about-marx.html?showComment=1369144674917#c9135395801097278615
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Have you understood what a market clearing price is yet, roddis?
Bob Roddis said...
- "The central and core event in economics is the voluntary exchange of goods and services by human beings at terms that are based upon their subjective preferences. That is also the foundation of Austrian analysis.o nice."
Not only does your definition completely ignore the institutional structure of human society but it is so vague as to be meaningless.
What is your defintion of "voluntary exchange"?
What is your defintion of "voluntary exchange"?
Is this a joke? Voluntary exchange needs no personal definition. The meaning of the words are clear. It means freely exchanged between the parties.
Why are you MMTers so opposed to human freedom anyway? That's a better question.
Unknown: Thank you for your response.
Not only are MMTers opposed to human freedom, they are so hell-bent on destroying the language that they cannot understand what the concept of human freedom even means. Part of the reason they are shameless is because they are oblivious.
Freedom is not just freedom "from" but the freedom "to".
For the Ancient Greeks freedom was the freedom to participate in government.
The idea that freedom means "freedom from government" is a perversion of the word.
It is the freedom for the strong to do as they will and the weak as they must.
From this comes the redefinition of the term "free market" as a market free of government, the opposite its original meaning.
To classical economists a free market was a market free of unearned income
- of economic rent.
"In order to expand markets and increase their economies’ competitive pricing position, classical economists sought to free their societies from the vestiges of feudalism—a landed aristocracy extracting land rent, and a banking class extracting interest and converting national debts in to the creation of monopoly trading privileges. Progressive Era reformers accordingly defined a free market as one with a government strong enough to tax away land rent and either break up monopolies or keep them in the public domain. The aim was to bring market prices in line with minimum necessary cost-value. This required a strong enough government to tax and check the vest ed financial, insurance, and real estate (FIRE) interests" - M Hudson.
Progressive Era reformers accordingly defined a free market as one with a government strong enough to tax away land rent and either break up monopolies or keep them in the public domain. The aim was to bring market prices in line with minimum necessary cost-value.
Nonsense. The "progressive era" was a contrivance for the robber barons to employ government as their protector.
The stage thus set by the failure of the merger movement, Kolko moves on to the myth that Progressive Era reforms were uniformly or even predominantly opposed by their affected industries. The key is to realize that, economic strategies like corporate consolidation having failed, companies turned to political strategies to freeze the status quo or to gain new competitive advantages. As Kolko states, "the essential purpose and goal of any measure of importance in the Progressive Era was not merely endorsed by key representatives of businesses involved; rather such bills were first proposed by them." Food companies, for example, wanted the Food and Drug Act so that they could turn its regulations against their competitors (e.g., oleo versus butter). Big meat packers desired to save their industry from tainted meat, which hurt business, but were unable to ensure the quality of small packers' meat and unwilling to pay for independent meat inspection--so they themselves initiated the meat inspection movement, lobbied for and won passage of the Meat Inspection Act, thereby forcing inspection onto the industry and its costs onto the federal government. As for the Federal Reserve Act, it was the product of a banking reform movement "initiated and sustained" by big bankers who sought to protect themselves from small bank competition. The Clayton Antitrust Act and the Federal Reserve Act? Most businessmen supported them to better protect themselves from antitrust prosecution under the Sherman Act's vague provisions or (among smaller businesses) to gain such advantages as enforced "fair trade price-fixing." Thus, Kolko shows that whether for protection from competition or from the government, businesses themselves initiated or shaped these Progressive Era reforms and others that most Americans regard as being part of an anti-business (or at least not pro-business) reform movement.
http://tinyurl.com/lorh6hg
Roddis - "these Progressive Era reforms and others that most Americans regard as being part of an anti-business (or at least not pro-business) reform movement"
On the contrary the Progressive Era reformers were pro-business in the sense that they sought to increase America's international competitiveness, its productive power, its technology & prosperity.
Roddis - "... thereby forcing inspection onto the industry and its costs onto the federal government."
I agree that private regulation & inspection, whatever else it may do, adds to the cost of doing business.
But I'm not sure you've thought about the implications of this.
It implies that the Government, by appropriating the responsibility & cost of regulation & enforcement, lowers the cost of doing business.
Restated:
Privatization, particularly of basic infrastructure & monopolies, raises the cost of doing business, thereby decreasing a nations ability to compete internationally.
Voluntary exchange (VE)
According to austrians is any exchange by private parties. This exposes the very low level and simpleton analysis that is Austrian economics. Ignoring that the world is a slightly more complex than they can comprehend or admit.
since humans have a physical presence, they must park the presence some where, yet according to VE rent is voluntarily if the government is absent .
I would rather not pay for gas. but i need gas to get to work. I need to work so I can buy food. I need food so I can live, But Austrians claim VE because only private parties are involved.
In contrast I have a little more choice when it comes to taxes. I could vote for politicians that tax and spend according to my beliefs. If all else fails I could always move, as living under any particular government is purely voluntary.
Lots of voluntary choices with hundreds of different governments in this world to chose from. Paying taxes and living under certain rules are a voluntary choice . In contrast there are very few refiners in the world to buy from.
Came across this blog while surfing the net. Intriguing. Have a look at this site which gives some pretty sold arguments against Austrian economics from an anti-statist anarcho-socialist perspective
http://socialistcommonwealth.webs.com/socialismagainstcapitalism.htm
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