Friday, January 25, 2019

Scott Sumner — Tax-and-spend progressives put faith in flawed policy theory

Scott Sumner — he of NGDP futures to control inflation — is an Austrian economist. I already addressed this once today. That's enough. They are never going to change their assumptions because if they did, they would no longer be Austrians.

In fairness to other Austrian economists, Scott Sumner is off on a tangent here rather than applying Austrian analysis. His historical comparisons are shot from the hip and silly.

The Hill
Tax-and-spend progressives put faith in flawed policy theory
Scott Sumner, Opinion Contributor


Konrad said...

Beginning with the title, the author tries to denigrate MMT by falsely equating it with “tax and spend Democrats,” who operate from the lie that the U.S. government operates on tax revenue.

Then we get into errors…

“The basic problem is that MMT proponents mix up the roles of fiscal and monetary policy. They argue that monetary policy should play a supporting role, holding down interest rates to reduce the cost of public borrowing.”

No. MMT proponents understand the difference between [1] fiscal policy (i.e. the amount of money the government creates by spending, and destroys by taxing) and [2] monetary policy (i.e. the central bank’s decisions regarding baseline interest rates on loans). Moreover, monetary policy refers to private borrowing, with the exception of T-securities.

MMT proponents simply seek to debunk the lie that US federal finances are the same as private household finances. (”We can’t spend money we don’t have.”) Would-be critics of MMT understand this, but they use lies and distortions to dance around it.

I must say, these idiots are increasingly worried.

“We’ve got to keep the peasants from learning the truth!”

Bob Roddis said...

Scott Sumner is ABSOLUTELY not an Austrian economist. There is NOTHING Austrian School in his analysis or proposals. Like you guys, he has no familiarity whatsoever with any aspect of Austrian concepts or analysis. That's always a good reason to reject something.

Bob Roddis said...

MMT proponents simply seek to debunk the lie that US federal finances are the same as private household finances.

Wrong. The government is exactly like a household but like a household full of thieves, murderers, torturers and assorted thugs. When they run out of money, they just murder and kill to get more.

Noah Way said...

The government creates money out of nothing, households can't do that.

Roddis - without putting too fine a point on it - you are a flaming idiot. Are you posting while intoxicated?

Ralph Musgrave said...

I just put an article on my own blog demolishing Sumner's article point by point:

Also it's good to see the resident troll, Bob Roddis, claiming government and households are the same. Finally we have proof that Bob does not understand the difference between micro and macro....:-)

Ryan Harris said...

I think Bob said they are and aren't the same -- the government has the power of guns and hence taxation and inflation. While MMT creator, Warren Mosler's, actually agrees 100% if you think back to his example of man with gun at door that won't let you leave without his business card that only he issues. Roddis inelegantly made the same point but the MMT trolls reflexively took their tribal positions and began a defense when they actually agree 100% -- if Mosler's had said it rather than Roddis.

Calgacus said...

Bob Roddis: When they [The government] run out of money, they just murder and kill to get more.

This is just wrong from any perspective. Warren Mosler can't run out of business cards, so he doesn't murder and kill to get more.


It is not that households or firms can't create money. Whenever they go into debt, that is what they are doing. It is just that what they create is not as good money as the government's. But there is no intrinsic, conceptual, logical difference. So Bob is right in that respect, the difference between the government and a household is not so great as often asserted.

Bob Roddis said...

I have clearly stated for years that a household is different from a government because the government can steal, murder and torture. With those differences, the general laws of economics apply the same.

Here is Bob Murphy describing the BIG POINT made during his debate with Warren Mosler. Murphy was amazed that Mosler so easily conceded the grotesque criminality that supports the issuance and use of fiat money. We both figured he would obfuscate:

During my debate with MMT guru Warren Mosler last week (raw video available here), I thought I had some good zingers that I was anxious to unleash on poor Warren. For example, I had an analogy for MMT, in which a couple is worried about their finances, and the wife says she will take a second job. The husband then says, “Nope, we aren’t constrained by paychecks. I’ll just go hold up liquor stores. Yes, if I do that too much, I’ll end up in prison, but that’s a far different constraint from ‘budget’ as you keep framing it.”

Mildly amusing, eh? Warren himself chuckled. You can imagine my surprise when Warren then gave his own analogy for MMT, in which people in the room won’t pay him anything for his business cards. But then he explains that there is a man with a gun outside the room, who won’t let them leave unless they have one of the cards. Voila! Now people are scrambling over themselves to perform jobs for Mosler. Unemployment is solved.

Bob Roddis said...

It is a credit to this blog that many government war crimes and other government horrors are reported here and are properly viewed as horrors.

Dozens of times I have noted in response in the comments that this government behavior is facilitated and "paid for" because the government under our marvelous fiat modern money system is not "revenue constrained". What else can I say?

Konrad said...

"What else can I say?"

Nothing. You've said it all.
Please declare "victory" and disappear.