Everyone knows governments need to tax before they can spend. What Modern Monetary Theory presupposes is, maybe they don't.Surprisingly decent article on MMT considering the dismissive headline. Covers most of the bases.
Vice
The Radical Left-Wing Theory That the Government Has Unlimited Money
Tom Streithorst
ht Ralph Musgrave
ht Ralph Musgrave
“Over Valued Idea”
ReplyDelete“An overvalued idea is a false belief that is maintained despite strong evidence that it is untrue.“
https://www.goodtherapy.org/blog/psychpedia/overvalued-idea
“An overvalued idea is a false belief that is maintained despite strong evidence that it is untrue.“
ReplyDeleteRight. This is different from a mistake in judgment.
A mistake in judgement is an error in the rational process.
Over-valuation is irrational behavior based on cognitive bias that is extreme since it cannot be corrected through rational means when evidence is not admitted as a criterion.
This is an important distinction to point out. It's of interest not only logically but also psychologically.
"Banana"
ReplyDelete"a tropical plant of the genus Musa, certain species of which are cultivated for their nutritious fruit."
http://www.dictionary.com/browse/banana
“when evidence is not admitted as a criterion.”
ReplyDeleteI wouldn’t say we’re doing a good job of that... we need to up our empiricism game...
Good article! Thanks
ReplyDelete"“when evidence is not admitted as a criterion.”
ReplyDeleteI dont think it is fair to say that they are not admitting evidence as a criterion at this point because imo all we are doing is making an assertion of another (to them) over-valued idea...
If we made the empirical case properly, THEN they would still not admit that empirical (scientific) evidence as a criterion, then I would agree that they are delusional...
At this point, all we can say is that the proper evidence has not yet been presented... so they can remain unconvinced due to their cognitive bias...
The problem with evidence is that so-called facts are theory-laden, which is to say in many cases ideology-laden.
ReplyDeleteThere is no overarching "reality" independent of frameworks for structuring experience in terms of psychoneurological functioning. e.g., reason and feeling cannot be disentangled at the most fundamental level (brain).
Experience is a combination of objective (data as the given in sense experience) and subjective interpretation. This means that disagreement is likely over the construction of "reality" in cases other than the trivial and what is at issue is not often the trivial case.
However, sometimes it is a matter of the trivial, and here there can be disagreement among "experts" where proper understanding of institutional arrangements like accounting standards resolves the issue clearly. But some seem unable to admit it because it undermines their position on the issues.
This is an issue that MMT faces in getting its points across about existing institutional arrangements, for example. Many seem to be under the illusion that the world is still on a fixed rate regime since it conforms to their point of view (bias). That is not an error in judgment (rational), but a blindspot resulting from cognitive bias (irrational). It's basically wishful thinking substituting for evidence-based truth.
A passenger plane that was flying over Ukraine was shot down and everyone died.
DeleteThat is a fact even if Financial Times editorial blames on Russia and Russia Today editorial blames on Europe/USA and even if some people say it didn't really happened.
Facts are facts. People are dead. There is an overreacting reality independent of frameworks.
The way you interpret the facts is another story.
“proper understanding of institutional arrangements like accounting standards resolves the issue clearly”
ReplyDeleteIf you went to Mosler/Mitchell/Kelton/Wray and asked them what basis of accounting the govt uses I guarantee none of them would be able to tell you...
Let's say you were in some meetings with the Wright bros 100 years ago and having problems with a wing design... testing wasnt going well... perhaps some doubts were being expressed... the solution would not be to say in the meeting "look at a bird! they can fly!"...
ReplyDeleteThis is what MMT is doing...
Its not technically helpful...
ReplyDelete"The problem with evidence is that so-called facts are theory-laden, which is to say in many cases ideology-laden."
ReplyDeleteNot in material matters Tom... you just do the experiment/demonstration/validation... document the empirical results and then proceed to detailed design/production...
You're trying to combine material matters and non-material matters into one unified theory... never going to work...
The economy is a material matter...
What I wrote was not my opinion but rather a brief statement of basic philosophy of science based on how minds work.
ReplyDeleteThe view of naive realism is that mind is a mirror of reality, so that experience is entirely objective. That is a naive view in light of contemporary understanding.
Naive realism takes simple cases and generalizes based on them, which overlooks that many of the most significant issues are based on complication and complexity.
ReplyDeleteMost of the evidence in macroeconomics is not directly observable. Most aggregation is not based on counting individual instances. Theoretical terms like "natural rate" are computed based on assumptions. Inflation rate is based on indexation that is arbitrary and changes over time.
Macro deals with "stylized facts" (Sraffa).
Furthermore, there is disagreement in the economics profession based on what Ludwik Fleck called "thinking style" and "thought collectives" (group-think). This influences what counts as evidence and how it is gathered.
Matt, Andre - Theories can be so good that they become the water that we fishies are swimming in - completely invisible to us. You can't just "do the experiment" without having a theory about what you are experimenting about. Saying that facts are theory-laden means that the very statement of the facts, the language, the concepts used in stating them embody some theory, it does not mean a denial of reality. There's a relevant discussion at billyblog right now about the word "theory" in MMT. A (scientific) theory is the only way we can get to truth, which is not always handed to us on a platter by the senses and what we learned when in elementary school.
ReplyDeleteEconomics, which is "worldly philosophy", and most especially monetary economics is emphatically a combination of material and non-material. The stuff that people make and do is the material side, the monetary, financial is the non-material side. The mainstream, monetarists, neoclassicals etc are pseudo-empiricisms that pretends to focus only on the "material" side and then sometimes tacks on the monetary. This is of limited value. Good economics of monetary production economies shows in a down to earth way how the material and non-material inextricably interact everywhere, every day.
@ André
ReplyDeleteThe MH17 incident is a good example of problems involving evidence. Everyone agrees, of course, that the plane was shot down although there is disagreement over what hit it, a BUK missile or shells from a fighter plane.
Much of there evidence based on artifacts and testimony gathered is also in dispute.
The parties involved have clear interests in the case and there are no participants involved in the matter that are not interested.
Under the circumstances, it is unlikely that the actual facts will ever be known, or if discovered, made public.
After all, it was only after a hundred years that it was established that the Lusitania was indeed trafficking arms just as the Germans claimed when they sunk it.
Most of what is significant in the world is either difficult to determine owing to context, subject to different interpretation, or heavily influenced by ideology.
"Under the circumstances, it is unlikely that the actual facts will ever be known, or if discovered, made public."
DeleteAgreed. Maybe we will never now what happened. But the fact is that something concrete happened.
Science should be about pursuing the concrete facts. We will never have a perfect theory capable of explaining 100% of the facts. But it should at least try...
“There's a relevant discussion at billyblog right now about the word "theory" in MMT.”
ReplyDeleteWe’ve been over that years ago here Tom took us thru it.... Tom should be the authority on this he has the rigorous training in Philosophy...
MH17 was not a controlled experiment...
ReplyDeleteUS military shoots down drones all the time and examines the event scientifically all the time...
ReplyDeleteCalgacus provides a good explanation. I would just add the social to the material and monetary. Both the financial and non-financial (real, actual) are heavily influenced by the social, which is more than the aggregation of individuals since it includes the complex and dynamic relations involved.
ReplyDeleteThis is not to say that there are no facts. The claim is rather than the facts agreed upon tend to be rather trivial in comparison to the mountain of data that is controversial.
Everyone operates under some cognitive bias. Quite naturally people of different thinking styles and thought collectives will have different cognitive biases and the biases that favor their POV will influence their approach.
Richard Feynman
“Imagine how much harder physics would be if electrons had feelings!”
“I’m smart enough to know that I’m dumb.”
“The first principle is that you must not fool yourself and you are the easiest person to fool.” “It doesn’t matter how beautiful your theory is, it doesn’t matter how smart you are. If it doesn’t agree with experiment, it’s wrong.”
“I never pay attention to anything by ‘experts’. I calculate everything myself.”
“For a successful technology, reality must take precedence over public relations, for Nature cannot be fooled.”
“You can know the name of that bird in all the languages of the world, but when you’re finished, you’ll know absolutely nothing whatever about the bird. You’ll only know about humans in different places, and what they call the bird. … I learned very early the difference between knowing the name of something and knowing something.”
“There’s all kinds of myths and pseudoscience all over the place. I may be quite wrong, maybe they do know all these things, but I don’t think I’m wrong. You see, I have the advantage of having found out how hard it is to get to really know something, how careful you have to be about checking the experiments, how easy it is to make mistakes and fool yourself. I know what it means to know something, and therefore I see how they get their information and I can’t believe that they know it. They haven’t done the work necessary, haven’t done the checks necessary, haven’t taken the care necessary. I have a great suspicion that they don’t know, that this stuff is and that they’re intimidating people.”
“Scientific knowledge is a body of statements of varying degrees of certainty — some most unsure, some nearly sure, but none absolutely certain.” “We absolutely must leave room for doubt or there is no progress and no learning. People search for certainty. But there is no certainty.” “I have approximate answers and possible beliefs in different degrees of certainty about different things, but I’m not absolutely sure of anything.”
US military shoots down drones all the time and examines the event scientifically all the time...
ReplyDeleteAgain, a simple example and the implication to generalize it.
Yes. Much less complicated in natural science where the systems are material and ergodic.
ReplyDeleteLife science is more complicated and gets complex quickly.
Social science is not only complicated but also complex.
Economics has aspects of all three. Trying to reduce it to a natural science is oversimplification other than in pretty simple cases that are more or less trivial in relation to the pressing questions, e.g, many of those affecting policy.
“Again, a simple example“
ReplyDeleteNo it’s not...
Just because SK eone is rigorously trained in something and then can “make it LOOK easy” doesn’t mean it is easy...
ReplyDeleteLook at Alan Greenspan playing Clarinet... he makes it look easy ... it wouldn’t look so with me trying to play it...
Then why is the evidence either not available or in dispute in the case of MH17?
ReplyDeleteNot for lack of material system ability or capacity. There are plenty of people on both side highly qualified to undertake the investigation.
It's not a simple case owing to context, e.g., having occurred in a conflict zone.
Of course, this is a special case. But social science is litter with such examples, which often are the critical matters that inquiring minds want to know.
The result is policy based on ideology rather than evidence. Similar to the investigation of MH17.
It’s classified Tom... “sources and methods”.... I’d assume if a fire control radar is energized anywhere on earth we probably know about it... ofc I don’t have any direct knowledge but I understand these systems generally...
ReplyDeletehttps://www.cia.gov/news-information/featured-story-archive/2010-featured-story-archive/intelligence-signals-intelligence-1.html
“The Intelligence Community refers to the collection and exploitation of signals transmitted from communication systems, radars, and weapon systems as signals intelligence (SIGINT).”
I’d assume we have it... we know what happened....