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.
Lacks nuance. Assumes MMT is a political ideology. An American liberal one at that.
Although it wasn't known as MMT at the time, Art Laffer disproves that.
Lacks research hence the lack of nuance and taxes argument.
You don't have to go far to see supply/demand inflation discussed in MMT.
IMHO bottleneck inflation still needs work.
You can't put mathematics on inflation, you can do the odd model but it is never a singular context. It can occur from infinite probabilities. That's a fool's errand.
Beyond that most economists know the source of inflation, its the same across the spectrum (unless you're an Austrian)
Nor do you have to go far to discover taxes don't fund spending but appears as it does to control inflation (mentioned in the article)
Tschaff Reisberg from a John Harvey script has a very good youtube on this
It is not MMT the author has issues with, its the methods of those American liberal inclined of implementing their policies.
That's not a problem with MMT, that's a problem with politics.
I don't know maybe the author can not delineate the two. As for the antagonistic headline - no, that's what doing nothing does.
When MMT critics are not attacking MMTers, they are attacking potential policies or are not on board with the Import/Export as there are times you need to build up your own strategic reserves.
These things don't dispute MMT, just goes to show there are numerous policies under the MMT economic framework.
You need to understand the functional operational realities of MMT economics before you can explore policy options. Many critics are jumping straight over this to the politics.
We all know 1+1=2 but why. It is that operand in the middle. Understanding the operations is the key to understanding MMT policy options.
Kervick nailed it: "if you want to expand the state, expand public education, build a national health care system and build an honest-to-goodness national pension program that works, you’re going to have to raise revenues."
Modern Money, MMT *is* a political ideology. The JG/ELR is very political. MMT's advocacy of free trade is very political. Pavlina's outsourcing the JG to NGO's is very political. MMT's hostility to a BIG is very political. Strip out the politics and you're left with functional finance and sectoral balances, and it's no longer MMT.
Not that there is anything wrong with "just" functional finance and sectoral balances.
The analogy of the sun and a blue sky comes to mind. These are the ‘essence of the day sky’: clouds serve to reveal or hide this essence. When the sun is shining and everything on the surface is right, the life-forms that respond best to light, flourish.
The essence of MMT for me is fiat money (sun) defined as an IOU; the blue sky is public purpose (common wealth). The clouds are concepts, systems etc that stand between the light and the life-forms (us and the planet) that best respond to light.
Whoever is focused on private purpose is looking at the jungle. Whoever is focused on public purpose is looking at the sky.
Lots of lightning and thunder in those clouds sometimes ….
It seems to me, the razor’s edge that humanity walks is always selfishness ^ generosity. Once you see that, everything else falls into place?
Private purpose is the training ground for public purpose. Then you begin to wonder why it is like that ….?
Dan Lynch: "Modern Money, MMT *is* a political ideology."
Exactly, precisely. I was trying to get at that in the post without saying so explicitly (God knows the post is long enough as it is).
Here is the unsustainable contradiction I've observed as a layman: MMTers start with "this is how the world works, nothing political about it, just facts." But which of your facts gets highlighted, which ones are central to the resulting narrative, is entirely political. So: "MMT, therefore free trade" is a deeply political statement.
I know MMTers like Modern Money above would love to have the subject taken as damn near scientific, but it's an overwhelming subjective - and political - one.
"Assumes MMT is a political ideology." Hahahaha that's a good one. The problem is that you assume it isn't.
And on the places I've encountered it (selection bias obviously, but Naked Capitalism first and foremost) MMT's politics is presented as an American liberal one, because it gets bundled with American liberal wish lists (job guarantee and such).
But when one points out that the theory is distinct from the purpose to one would like to see the theory used, or that other MMTers are advocating decidedly 1%-friendly uses for it, the pushback is pretty sharp.
"MMT, therefore free trade" is a deeply political statement.
MMT is into "free trade?" I thought they were just into floating currencies and asserting for example that we don't necessarily have a "China problem." The point being that a "sovereign currency" and a floating exchange rate affords "policy space" in which a number of approaches to foreign trade could be accommodated. Some critics have made the perhaps valid argument that MMT trade theory is insufficiently developed.
Sure the JG is political, but it just so happens to be the thing that holds the pieces together (according to MMT developers) so that they can make the claim: "full employment with price stability." Conventional economics says that is impossible. This claim is the whole reason MMT is "news," or would be if problem solving was actually "on the agenda."
For the MMT model of "inflation" (metaphor) please see the 13:00 mark in the video at this link where Warren, R Wray and Bill Mitchell explain how what is perceived typically as "inflation" occurs under a FFNC system:
"...if you want to expand the state, expand public education, build a national health care system and build an honest-to-goodness national pension program that works..."
1. expand the state: I think what Dan means here is achieve a general view in our nation of an expanded role for govt leadership, this seems like a philosophical issue and shouldnt affect fiscal policy... this is an "authoritarian vs libertarian" philosophical debate where the current problem is the libertarians are completely dominating and we have the resultant chaos... so we just have to pound the libertarians...
2. expand public education: I think here we have the system in place, we just need to increase the flows into it... taxes will increase as that sector receives higher provision.... higher pay for personnel, updated IT, and a bit longer hours for those working in this sector for the increase in pay...
3. build a national health care system: again we already have one, it is just under provisioned.... taxes will increase if we increase provision to the sector..
4. pension program that works: again we already have one that works in Social Security, every month the accounts are credited... it is just under supplied and should require no fiscal adjustment other than raise the flow into it, taxes will increase automatically as the non-retired sector receives incomes and profits in the course of provisioning the retired sector...
I guess you mean that literally because there isn't a single one of you that has bothered to understand even basic Austrian and libertarian concepts that wouuld allow you to engage in a debate "pounding". Such bizarre behavior makes this a commpletely one sided debate which you MMTers are losing badly. In fact, it's a complete rout. Give up.
I'm only referring to your helping me to make my point that MMT is antagonistic to libertarians Bob...
I dont see any value to debating libertarian philosophy vs authoritarian philosophy...
I think there is value though in pointing out to people that this philosophical dichotomy is the main issue, and people need to seek to figure out which side they are on and proceed accordingly...
Right now libertarians are the dominant philosophy and accordingly, things are all f-ed up in the world... so authoritarians have to respond to this or things are never going to get any better with our economic systems...
I interpret this auth vs lib and the left vs right as what Warren means when he says "that depends on your politics..."
iow, Warren is looking at this on the y-axis of the political compass and is observing that the FFNC system we currently have... I'll be careful here:
"in place" or,
"operating", or
something like that relies on authority first and then the specific policies are worked out politically which is where the "left vs right" comes in...
If we are not operating FFNC, and instead are under gold/silver/copper then that is a libertarian system on the y-axis of the political compass and then the policies STILL have to be worked out via the "left vs right" political process....
The WORST situation would be like we have now, where "in place" we have an authoritarian system, but we have a bunch of libertarians trying to administer it... the politics then becomes IMPOSSIBLE...
We are all about the x-axis on the compass but it is as if we are completely blind to the y-axis...
Hence I often try to highlight the applicable issues that are necessarily decided in my view ONLY along the y-axis FIRST... and THEN we address the "left vs right"...
If we have an authoritarian system "in place" and this is not appreciated by our administrators in the majesterial positions, economic chaos will be the result always imo.. I dont see how else it could work out...
To summarize MMT, operational analysis of monetary regimes reveals the policy space they delimit. Policy space is divided into monetary and fiscal. Monetary policy is concerned with the quantity or price of money, while fiscal policy is concerned with government expenditure and taxation. Given the operative policy space, certain options are included and excluded. The choice of options is political.
Policy is informed by economics and economics as it is practiced is inherently ideological. Therefore it is difficult to separate the positive and normative, the descriptive and prescriptive, since they are entangled in the various ideologies owing to philosophical presumptions, choice of assumptions, and choice of method.
MMT economists take an approach that has been influenced by views of Knapp, Innes, Keynes, Lerner, Post Keynesians, Institutionalists, Hyman Minsky, and Wynne Godley.
According to MMT economists, most ideas in MMT are not original. What is original is the synthesis. According to Warren Mosler, the key innovation of MMT, which is the founding principle, is that operationally a country that is a currency sovereign not borrowing in a foreign currency is the currency monopolist controlling the unit of account that the monopolist establishes. A country may choose to exercise this monopoly in different ways, delegate it fully or partially, or forego its potential through ignorance of it and how it operates.
The aspect of MMT that describes operations shows that monetary systems allow for many different policy approaches in different economic contexts. IN this sense the MMT analysis is policy-neutral.
However, in any context policy choices must be made from a variety of options and there are both political and economic reasons for preferring various options over others.
I would not say that there is a single "MMT" policy solution. Different MMT economists have different policy ideas, and different countries would also approach policy differently. Where they agree is over prioritizing full employment, which raises the issue of price stability.
The great advantage of MMT is the it claims to be a solution to balancing the trifecta of growth, employment, and price stability at actual full employment (less transitional), something that mainstream economists generally deny is possible, arguing for a natural rate of unemployment greater than full employment less transitional in order to control inflation.
Mainstream economists believe that the natural rate of employment is a function of the natural rate of interest, so monetary policy is the right policy lever. MMT economists hold that theory and history show this to be ineffective and that fiscal policy is the optimal choice, with government fiscal policy offsetting shifting non-government saving desire. This can be accomplished through automatic stabilization with the MMT JG mopping up residual unemployment as may be called for by changing conditions.
Saying that society needs some sort of authority, like law for example, doesn’t make you an ‘authoritarian’ as opposed to a ‘libertarian’.
Right-wing so-called ‘libertarians’ believe in authority, they just want it to be embodied in the particular people, institutions and laws that they happen to favor, as opposed to those that they don’t.
I don't think it is possible to say that if certain policy choices is adopted that certain fiscal policy follows from it without bringing in the specific context.
It is possible to say that when the economy is operating sub-optimally owing to lagging demand, increasing govt expenditure will improve the situation by increasing demand without the need to raise taxes. However, the same expenditure could be inflationary in an economy running optimally if it cannot expand to meet the demand increase of the expenditure.
I dont know if you have the term defined correctly there...
Law comes out of authority... iow you have to have authority FIRST and THEN you can have laws, regs., etc..
Look perhaps break it down this way, if we (MMT) say "under an FFNC system, our govt institution possesses and claims the absolute earthly authority to simply credit a bank account for public purposes, subject ONLY to availability of the real items of provision" .... or something like that, and then 90% of the people respond "NO, it does NOT possess such authority"... then, we will NEVER achieve better outcomes with the present system we have in place...
This has to be settled FIRST, ie "Do we have this authority or dont we?"
If we say "we dont" then for crying out loud lets just get back under the metals and send out a bunch of people to start digging... but if we say "we do" then lets dispatch with the libertarians and get on with things...
This is the only two ways it can go... what are the other ways?
Tom does too, and Ed Rombach here, and I assert they are wrong about themselves... I dont see them that way at all.. they are authoritarian in my view, its nothing to be ashamed of or afraid of if you understand what 'authority' really is... where it comes from, etc...
Ignacio; "Unless you have a very narrow view of what is an "economy"
This is the stylized neoclassical model of a barter economy with neutral money and no government. It's an idealization that not only does not exist, but never existed because it ignores fundamental aspects of society and social organization, as well as obvious facts of anthropology, sociology and history.
"if we (MMT) say "under an FFNC system, our govt institution possesses and claims the absolute earthly authority to simply credit a bank account for public purposes, subject ONLY to availability of the real items of provision" .... or something like that, and then 90% of the people respond "NO, it does NOT possess such authority"... then, we will NEVER achieve better outcomes with the present system we have in place... "
False dichotomy. I think the government has the authority and the right to credit bank accounts, but not an "absolute earthly authority" regardless of whether 90% of the population wants it to or not. I support democracy, and if 90% of the population didn't want the government to 'credit bank accounts' then so be it. The government belongs to 'the People'.
"they are authoritarian in my view, its nothing to be ashamed of or afraid of if you understand what 'authority' really is... where it comes from, etc..."
Authoritarian is the wrong word, Matt. Supporting the existence of a government or nation state does not in itself turn you into an 'authoritarian' as opposed to a 'libertarian'.
" I think the government has the authority and the right to credit bank accounts"
That is because you are not a libertarian you are an authoritarian... same for Tom, Bill, Ed, etc... imo.
"but not an "absolute earthly authority"
Yes but only if we end up with libertarians in charge...
iow in my view, people can be blind to 'authority' or antagonistic to 'authority' (these are the libertarians) and when this cohort gets into the majesterial positions ("We're out of money!!") then it is perhaps like you say "we have no absolute authority"... it can APPEAR that way and I see it as this is where you are coming from here...
But, I assert the 'authority' is always "still there".... iow the 'authority' can be corrupted or opposed sometimes successfully by the 'libertarians' among us... but it is always still there for us to access...
(I'm trying to work in secular terms here...which makes this more difficult.. )
We can even write laws in an environment where the magistrates are blind to authority and the laws become meaningless... laws established in an era of anti-authority libertarian control can become worth less than the paper they are written on....
He we have the "Humphrey Hawkins Full Employment Act" which is A LAW that dictates full employment and it is IGNORED and MEANINGLESS because we have a bunch of libertarians in the majesterial positions right now...
This LAW is just sitting there without enforcement as the "enforcers" are basically libertarians who operate under selective enforcement when they think such enforcement will benefit them...
iow they only use the law for selfish purposes... which can obviously happen when most people cannot see 'authority'.... this is where we get the bailouts for the elite libertarians while there is no justice for the rest of us...
We need to get a better view and understanding of 'authority'...
(again I'm trying to keep this in secular terms...)
"Various schools of libertarian thought offer a range of views regarding the legitimate functions of state and private power, often calling to restrict or even to wholly dissolve pervasive social institutions..... anarchists propose to completely eliminate the state as an illegitimate political system.[6][7]"
So we can see this in action here... its dark... about as dark as you can get imo...
Though there are perhaps degrees of it... but dont let that fool you... it is there all the time operating against authority in some measure...
"Democracy" is not synonymous with "liberty" in fact just the opposite... so again I see MMT not as an antagonist of Democracy but rather libertarianism...
MMT is a Theory born of the "y-axis" ('taxes drive the currency', etc..) .... the 'economics' or "house law" (keyword here being "LAW") is meaningless without a significant view of authority...
So first comes authority (out-being) and then comes law (nomos) out of it... no legitimate law without a view of authority first.. our ability to view authority can also vary between individuals...
authority is not tyranny, despotism, dictatorship, etc...
who that criticizes or denigrates or is dismissive of MMT is not a libertarian of some sort or degree?
Where are the authoritarians who are criticizing or denigrating MMT? Where/who are these people?
I dont know of any...
Authoritarians believe in govt institutions, value the law... enforce the law/regulations, are judicial, etc...
Are you saying that whether or not we are believing that our govt institution can "credit a bank account, etc..." is a political view? a "left/right" issue?
Its not.
You have right people who have this view (like myself, perhaps beowulf, some others...) and left people who also have this view so by definition it cannot be a political issue (ie a "left/right" issue...)
This view exists in the various positions along the y-axis of the political compass (which is the auth/lib axis) , NOT the x-axis (which is the left/right axis.)
If we get to the point where we can get a plurality or most people seeing our authority in these matters you will still have political debate/votes/democracy about what purposes/laws we might pursue/legislate under this authority...
left people might want free federal combination abortion/euthanasia centers on every corner, while right people may want to start bombing MENA immediately, etc... who knows...
but those decisions will be made democratically in the context of a correct view of our authority, which imo has been missing for near going on 2,000 years and if we get there I will trust the democratic process to come up with the correct policies at that time as this will all change if we can get the correct view and understanding of our authority... the politics related to economic policies will then take care of itself...
We generally do not understand 'authority' at this time imo...
(this is my attempt at a secular/philosophical description of the current situation we of mankind are in...)
‘Authority’ is the imposition of a world view, encapsulated in some civilisation, culture, and those in power. ‘Laws’ try to cement that view. Civilisations come and go, disappearing like mist on the landscape, leaving behind a few bones and buildings, eroding away. Looking at something depends upon the time-frame you are operating in, and the frame-rate.
When someone passes, we remember their essence; then in a generation or two it is like they never existed – it’s a little harder with a whole civilisation - to get a feel for its essence. Right now, there is a lot of conflict going on in the world as ideas are being fought out, and greed holds sway. Crisis after crisis emerges, opportunities wasted. I hear a cry for peace, lost in the winds.
For me, underlying all is human nature; governed by the same law that vaporises a drop from the ocean, freezes it on a mountain, and takes it on a journey back home to the sea. That is our priority.
Dan Lynch, former MMT ally makes the same errors as Danps. Tom Hickey essentially repeats what I said.
Employment/Unemployment is always political
Hostility it is not against a UBI but a highlight of economic functions that may be inflationary. Coppola disputes MMT terminology of BI and BIG hence why I used UBI (that said even Wikipedia is unclear on the matter)
"Matt, you shouldn't mix up 'authority' in general with 'authoritarianism'."
yes I agree... I dont have my terminology solid on this yet.. I'll continue to try to hone the terms wrt what I see as an important lib/auth dichotomy which exists at present...
y take a look at the NEP blog Tom linked to above where Bill Black went to some left/right coalition thing (with Ralph Nader and Norquist together no less) and the problem was that they were all 'libertarians' and were thinking the govt is broke whether from the left OR right... so this is further evidence that this is not a 'political' lefr/right issue... its an authority/liberty issue...
36 comments:
Thanks for the link Tom!
Lacks nuance.
Assumes MMT is a political ideology. An American liberal one at that.
Although it wasn't known as MMT at the time, Art Laffer disproves that.
Lacks research hence the lack of nuance and taxes argument.
You don't have to go far to see supply/demand inflation discussed in MMT.
IMHO bottleneck inflation still needs work.
You can't put mathematics on inflation, you can do the odd model but it is never a singular context. It can occur from infinite probabilities. That's a fool's errand.
Beyond that most economists know the source of inflation, its the same across the spectrum (unless you're an Austrian)
Nor do you have to go far to discover taxes don't fund spending but appears as it does to control inflation (mentioned in the article)
Tschaff Reisberg from a John Harvey script has a very good youtube on this
It is not MMT the author has issues with, its the methods of those American liberal inclined of implementing their policies.
That's not a problem with MMT, that's a problem with politics.
I don't know maybe the author can not delineate the two. As for the antagonistic headline - no, that's what doing nothing does.
When MMT critics are not attacking MMTers, they are attacking potential policies or are not on board with the Import/Export as there are times you need to build up your own strategic reserves.
These things don't dispute MMT, just goes to show there are numerous policies under the MMT economic framework.
You need to understand the functional operational realities of MMT economics before you can explore policy options. Many critics are jumping straight over this to the politics.
We all know 1+1=2 but why. It is that operand in the middle. Understanding the operations is the key to understanding MMT policy options.
Kervick nailed it: "if you want to expand the state, expand public education, build a national health care system and build an honest-to-goodness national pension program that works, you’re going to have to raise revenues."
Modern Money, MMT *is* a political ideology. The JG/ELR is very political. MMT's advocacy of free trade is very political. Pavlina's outsourcing the JG to NGO's is very political. MMT's hostility to a BIG is very political. Strip out the politics and you're left with functional finance and sectoral balances, and it's no longer MMT.
Not that there is anything wrong with "just" functional finance and sectoral balances.
I am also a lay-reader of MMT.
The analogy of the sun and a blue sky comes to mind. These are the ‘essence of the day sky’: clouds serve to reveal or hide this essence. When the sun is shining and everything on the surface is right, the life-forms that respond best to light, flourish.
The essence of MMT for me is fiat money (sun) defined as an IOU; the blue sky is public purpose (common wealth). The clouds are concepts, systems etc that stand between the light and the life-forms (us and the planet) that best respond to light.
Whoever is focused on private purpose is looking at the jungle. Whoever is focused on public purpose is looking at the sky.
Lots of lightning and thunder in those clouds sometimes ….
It seems to me, the razor’s edge that humanity walks is always selfishness ^ generosity. Once you see that, everything else falls into place?
Private purpose is the training ground for public purpose. Then you begin to wonder why it is like that ….?
Dan Lynch: "Modern Money, MMT *is* a political ideology."
Exactly, precisely. I was trying to get at that in the post without saying so explicitly (God knows the post is long enough as it is).
Here is the unsustainable contradiction I've observed as a layman: MMTers start with "this is how the world works, nothing political about it, just facts." But which of your facts gets highlighted, which ones are central to the resulting narrative, is entirely political. So: "MMT, therefore free trade" is a deeply political statement.
I know MMTers like Modern Money above would love to have the subject taken as damn near scientific, but it's an overwhelming subjective - and political - one.
"Assumes MMT is a political ideology." Hahahaha that's a good one. The problem is that you assume it isn't.
And on the places I've encountered it (selection bias obviously, but Naked Capitalism first and foremost) MMT's politics is presented as an American liberal one, because it gets bundled with American liberal wish lists (job guarantee and such).
But when one points out that the theory is distinct from the purpose to one would like to see the theory used, or that other MMTers are advocating decidedly 1%-friendly uses for it, the pushback is pretty sharp.
"MMT, therefore free trade" is a deeply political statement.
MMT is into "free trade?" I thought they were just into floating currencies and asserting for example that we don't necessarily have a "China problem." The point being that a "sovereign currency" and a floating exchange rate affords "policy space" in which a number of approaches to foreign trade could be accommodated. Some critics have made the perhaps valid argument that MMT trade theory is insufficiently developed.
Sure the JG is political, but it just so happens to be the thing that holds the pieces together (according to MMT developers) so that they can make the claim: "full employment with price stability." Conventional economics says that is impossible. This claim is the whole reason MMT is "news," or would be if problem solving was actually "on the agenda."
Danps,
For the MMT model of "inflation" (metaphor) please see the 13:00 mark in the video at this link where Warren, R Wray and Bill Mitchell explain how what is perceived typically as "inflation" occurs under a FFNC system:
http://mikenormaneconomics.blogspot.com/2011/11/infaltion.html
And I would point out that as Dan posits here:
"...if you want to expand the state, expand public education, build a national health care system and build an honest-to-goodness national pension program that works..."
1. expand the state: I think what Dan means here is achieve a general view in our nation of an expanded role for govt leadership, this seems like a philosophical issue and shouldnt affect fiscal policy... this is an "authoritarian vs libertarian" philosophical debate where the current problem is the libertarians are completely dominating and we have the resultant chaos... so we just have to pound the libertarians...
2. expand public education: I think here we have the system in place, we just need to increase the flows into it... taxes will increase as that sector receives higher provision.... higher pay for personnel, updated IT, and a bit longer hours for those working in this sector for the increase in pay...
3. build a national health care system: again we already have one, it is just under provisioned.... taxes will increase if we increase provision to the sector..
4. pension program that works: again we already have one that works in Social Security, every month the accounts are credited... it is just under supplied and should require no fiscal adjustment other than raise the flow into it, taxes will increase automatically as the non-retired sector receives incomes and profits in the course of provisioning the retired sector...
rsp,
danps,
Consider you may be saying "democracy" when what you are really thinking about is "libertarianism"...
For instance I would certainly say that MMT is an antagonist of libertarianism....
rsp,
. so we just have to pound the libertarians...
I guess you mean that literally because there isn't a single one of you that has bothered to understand even basic Austrian and libertarian concepts that wouuld allow you to engage in a debate "pounding". Such bizarre behavior makes this a commpletely one sided debate which you MMTers are losing badly. In fact, it's a complete rout. Give up.
I guess you guys missed Warren Mosler running off and hiding in the middle of his "public debate" with Austrian Taylor Conant:
http://publicdebates.blogspot.com/
It's over. You've lost. You are afraid to even run basic Austrian concepts through your minds.
As if right on cue Bob.... thanks for helping me make my point...
rsp,
It's unclear to me how MMTers failing to engage their opponents' arguments can be seen as a victory for the MMTers. Please explain.
Bob, he engages Conant's arguments ad nauseum. Conant is too thick to see Mosler's points. What point is there in continuing the debate?
I'm only referring to your helping me to make my point that MMT is antagonistic to libertarians Bob...
I dont see any value to debating libertarian philosophy vs authoritarian philosophy...
I think there is value though in pointing out to people that this philosophical dichotomy is the main issue, and people need to seek to figure out which side they are on and proceed accordingly...
Right now libertarians are the dominant philosophy and accordingly, things are all f-ed up in the world... so authoritarians have to respond to this or things are never going to get any better with our economic systems...
rsp,
"failing to engage their opponents' arguments"
What arguments. You have none. Just stupid slogans, endlessly repeated.
"funny money!"
"distortion!!"
"violence!!!"
That's your argument. Well done. Now go away and play somewhere else, little boy.
Matt,
"I think there is value though in pointing out to people that this philosophical dichotomy is the main issue"
It's not the main issue at all. This isn't about 'authoritarians' vs 'libertarians'.
y,
How not so?
I interpret this auth vs lib and the left vs right as what Warren means when he says "that depends on your politics..."
iow, Warren is looking at this on the y-axis of the political compass and is observing that the FFNC system we currently have... I'll be careful here:
"in place" or,
"operating", or
something like that relies on authority first and then the specific policies are worked out politically which is where the "left vs right" comes in...
If we are not operating FFNC, and instead are under gold/silver/copper then that is a libertarian system on the y-axis of the political compass and then the policies STILL have to be worked out via the "left vs right" political process....
The WORST situation would be like we have now, where "in place" we have an authoritarian system, but we have a bunch of libertarians trying to administer it... the politics then becomes IMPOSSIBLE...
We are all about the x-axis on the compass but it is as if we are completely blind to the y-axis...
Hence I often try to highlight the applicable issues that are necessarily decided in my view ONLY along the y-axis FIRST... and THEN we address the "left vs right"...
If we have an authoritarian system "in place" and this is not appreciated by our administrators in the majesterial positions, economic chaos will be the result always imo.. I dont see how else it could work out...
rsp,
To summarize MMT, operational analysis of monetary regimes reveals the policy space they delimit. Policy space is divided into monetary and fiscal. Monetary policy is concerned with the quantity or price of money, while fiscal policy is concerned with government expenditure and taxation. Given the operative policy space, certain options are included and excluded. The choice of options is political.
Policy is informed by economics and economics as it is practiced is inherently ideological. Therefore it is difficult to separate the positive and normative, the descriptive and prescriptive, since they are entangled in the various ideologies owing to philosophical presumptions, choice of assumptions, and choice of method.
MMT economists take an approach that has been influenced by views of Knapp, Innes, Keynes, Lerner, Post Keynesians, Institutionalists, Hyman Minsky, and Wynne Godley.
According to MMT economists, most ideas in MMT are not original. What is original is the synthesis. According to Warren Mosler, the key innovation of MMT, which is the founding principle, is that operationally a country that is a currency sovereign not borrowing in a foreign currency is the currency monopolist controlling the unit of account that the monopolist establishes. A country may choose to exercise this monopoly in different ways, delegate it fully or partially, or forego its potential through ignorance of it and how it operates.
The aspect of MMT that describes operations shows that monetary systems allow for many different policy approaches in different economic contexts. IN this sense the MMT analysis is policy-neutral.
However, in any context policy choices must be made from a variety of options and there are both political and economic reasons for preferring various options over others.
I would not say that there is a single "MMT" policy solution. Different MMT economists have different policy ideas, and different countries would also approach policy differently. Where they agree is over prioritizing full employment, which raises the issue of price stability.
The great advantage of MMT is the it claims to be a solution to balancing the trifecta of growth, employment, and price stability at actual full employment (less transitional), something that mainstream economists generally deny is possible, arguing for a natural rate of unemployment greater than full employment less transitional in order to control inflation.
Mainstream economists believe that the natural rate of employment is a function of the natural rate of interest, so monetary policy is the right policy lever. MMT economists hold that theory and history show this to be ineffective and that fiscal policy is the optimal choice, with government fiscal policy offsetting shifting non-government saving desire. This can be accomplished through automatic stabilization with the MMT JG mopping up residual unemployment as may be called for by changing conditions.
Matt,
Saying that society needs some sort of authority, like law for example, doesn’t make you an ‘authoritarian’ as opposed to a ‘libertarian’.
Right-wing so-called ‘libertarians’ believe in authority, they just want it to be embodied in the particular people, institutions and laws that they happen to favor, as opposed to those that they don’t.
Economics is political, as economics implies relationships and exchanges,and politics is institutional framing for regulating that behaviour.
But economist pretend to be "super serious business scientists" and have physics envy so... here we are, discussing bullshit.
Unless you have a very narrow view of what is an "economy".
I don't think it is possible to say that if certain policy choices is adopted that certain fiscal policy follows from it without bringing in the specific context.
It is possible to say that when the economy is operating sub-optimally owing to lagging demand, increasing govt expenditure will improve the situation by increasing demand without the need to raise taxes. However, the same expenditure could be inflationary in an economy running optimally if it cannot expand to meet the demand increase of the expenditure.
Matt,
Bill Mitchell apparently defines himself as a 'left libertarian'.
y,
I dont know if you have the term defined correctly there...
Law comes out of authority... iow you have to have authority FIRST and THEN you can have laws, regs., etc..
Look perhaps break it down this way, if we (MMT) say "under an FFNC system, our govt institution possesses and claims the absolute earthly authority to simply credit a bank account for public purposes, subject ONLY to availability of the real items of provision" .... or something like that, and then 90% of the people respond "NO, it does NOT possess such authority"... then, we will NEVER achieve better outcomes with the present system we have in place...
This has to be settled FIRST, ie "Do we have this authority or dont we?"
If we say "we dont" then for crying out loud lets just get back under the metals and send out a bunch of people to start digging... but if we say "we do" then lets dispatch with the libertarians and get on with things...
This is the only two ways it can go... what are the other ways?
I dont see any.... rsp,
y,
Tom does too, and Ed Rombach here, and I assert they are wrong about themselves... I dont see them that way at all.. they are authoritarian in my view, its nothing to be ashamed of or afraid of if you understand what 'authority' really is... where it comes from, etc...
rsp,
Ignacio; "Unless you have a very narrow view of what is an "economy"
This is the stylized neoclassical model of a barter economy with neutral money and no government. It's an idealization that not only does not exist, but never existed because it ignores fundamental aspects of society and social organization, as well as obvious facts of anthropology, sociology and history.
"if we (MMT) say "under an FFNC system, our govt institution possesses and claims the absolute earthly authority to simply credit a bank account for public purposes, subject ONLY to availability of the real items of provision" .... or something like that, and then 90% of the people respond "NO, it does NOT possess such authority"... then, we will NEVER achieve better outcomes with the present system we have in place... "
False dichotomy. I think the government has the authority and the right to credit bank accounts, but not an "absolute earthly authority" regardless of whether 90% of the population wants it to or not. I support democracy, and if 90% of the population didn't want the government to 'credit bank accounts' then so be it. The government belongs to 'the People'.
Matt,
"they are authoritarian in my view, its nothing to be ashamed of or afraid of if you understand what 'authority' really is... where it comes from, etc..."
Authoritarian is the wrong word, Matt. Supporting the existence of a government or nation state does not in itself turn you into an 'authoritarian' as opposed to a 'libertarian'.
" I think the government has the authority and the right to credit bank accounts"
That is because you are not a libertarian you are an authoritarian... same for Tom, Bill, Ed, etc... imo.
"but not an "absolute earthly authority"
Yes but only if we end up with libertarians in charge...
iow in my view, people can be blind to 'authority' or antagonistic to 'authority' (these are the libertarians) and when this cohort gets into the majesterial positions ("We're out of money!!") then it is perhaps like you say "we have no absolute authority"... it can APPEAR that way and I see it as this is where you are coming from here...
But, I assert the 'authority' is always "still there".... iow the 'authority' can be corrupted or opposed sometimes successfully by the 'libertarians' among us... but it is always still there for us to access...
(I'm trying to work in secular terms here...which makes this more difficult.. )
rsp,
y,
We can even write laws in an environment where the magistrates are blind to authority and the laws become meaningless... laws established in an era of anti-authority libertarian control can become worth less than the paper they are written on....
He we have the "Humphrey Hawkins Full Employment Act" which is A LAW that dictates full employment and it is IGNORED and MEANINGLESS because we have a bunch of libertarians in the majesterial positions right now...
This LAW is just sitting there without enforcement as the "enforcers" are basically libertarians who operate under selective enforcement when they think such enforcement will benefit them...
iow they only use the law for selfish purposes... which can obviously happen when most people cannot see 'authority'.... this is where we get the bailouts for the elite libertarians while there is no justice for the rest of us...
We need to get a better view and understanding of 'authority'...
(again I'm trying to keep this in secular terms...)
rsp,
y,
this is from the wiki on libertarianism:
"Various schools of libertarian thought offer a range of views regarding the legitimate functions of state and private power, often calling to restrict or even to wholly dissolve pervasive social institutions..... anarchists propose to completely eliminate the state as an illegitimate political system.[6][7]"
So we can see this in action here... its dark... about as dark as you can get imo...
Though there are perhaps degrees of it... but dont let that fool you... it is there all the time operating against authority in some measure...
"Democracy" is not synonymous with "liberty" in fact just the opposite... so again I see MMT not as an antagonist of Democracy but rather libertarianism...
MMT is a Theory born of the "y-axis" ('taxes drive the currency', etc..) .... the 'economics' or "house law" (keyword here being "LAW") is meaningless without a significant view of authority...
So first comes authority (out-being) and then comes law (nomos) out of it... no legitimate law without a view of authority first.. our ability to view authority can also vary between individuals...
rsp,
y,
authority is not tyranny, despotism, dictatorship, etc...
who that criticizes or denigrates or is dismissive of MMT is not a libertarian of some sort or degree?
Where are the authoritarians who are criticizing or denigrating MMT? Where/who are these people?
I dont know of any...
Authoritarians believe in govt institutions, value the law... enforce the law/regulations, are judicial, etc...
Are you saying that whether or not we are believing that our govt institution can "credit a bank account, etc..." is a political view? a "left/right" issue?
Its not.
You have right people who have this view (like myself, perhaps beowulf, some others...) and left people who also have this view so by definition it cannot be a political issue (ie a "left/right" issue...)
This view exists in the various positions along the y-axis of the political compass (which is the auth/lib axis) , NOT the x-axis (which is the left/right axis.)
If we get to the point where we can get a plurality or most people seeing our authority in these matters you will still have political debate/votes/democracy about what purposes/laws we might pursue/legislate under this authority...
left people might want free federal combination abortion/euthanasia centers on every corner, while right people may want to start bombing MENA immediately, etc... who knows...
but those decisions will be made democratically in the context of a correct view of our authority, which imo has been missing for near going on 2,000 years and if we get there I will trust the democratic process to come up with the correct policies at that time as this will all change if we can get the correct view and understanding of our authority... the politics related to economic policies will then take care of itself...
We generally do not understand 'authority' at this time imo...
(this is my attempt at a secular/philosophical description of the current situation we of mankind are in...)
rsp,
On (human) authority and laws:
‘Authority’ is the imposition of a world view, encapsulated in some civilisation, culture, and those in power. ‘Laws’ try to cement that view. Civilisations come and go, disappearing like mist on the landscape, leaving behind a few bones and buildings, eroding away. Looking at something depends upon the time-frame you are operating in, and the frame-rate.
When someone passes, we remember their essence; then in a generation or two it is like they never existed – it’s a little harder with a whole civilisation - to get a feel for its essence. Right now, there is a lot of conflict going on in the world as ideas are being fought out, and greed holds sway. Crisis after crisis emerges, opportunities wasted. I hear a cry for peace, lost in the winds.
For me, underlying all is human nature; governed by the same law that vaporises a drop from the ocean, freezes it on a mountain, and takes it on a journey back home to the sea. That is our priority.
Matt, you shouldn't mix up 'authority' in general with 'authoritarianism'.
Dan Lynch, former MMT ally makes the same errors as Danps. Tom Hickey essentially repeats what I said.
Employment/Unemployment is always political
Hostility it is not against a UBI but a highlight of economic functions that may be inflationary. Coppola disputes MMT terminology of BI and BIG hence why I used UBI (that said even Wikipedia is unclear on the matter)
I tried to post at the original site, without success. There was some technical glitch.
But there was not really much to comment on -- just a bunch of gibberish as far as I can tell.
Long live MMT. It makes sense to me, in many few words than the nonsense at the link. "Pruning shears" -- how ironic...
"Matt, you shouldn't mix up 'authority' in general with 'authoritarianism'."
yes I agree... I dont have my terminology solid on this yet.. I'll continue to try to hone the terms wrt what I see as an important lib/auth dichotomy which exists at present...
y take a look at the NEP blog Tom linked to above where Bill Black went to some left/right coalition thing (with Ralph Nader and Norquist together no less) and the problem was that they were all 'libertarians' and were thinking the govt is broke whether from the left OR right... so this is further evidence that this is not a 'political' lefr/right issue... its an authority/liberty issue...
rsp,
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