Wednesday, February 20, 2019

Bill Mitchell — The erroneous ‘lets have a little, some or no MMT’ narrative

It is Wednesday – so just a few observations and then we get down a bit dirty (funky that is). Today, I consider the GND a bit, critics of MMT, Japan, and more. Never a dull moment really. I didn’t really intend writing much but when you piece together a few thoughts, the words flow and so it is. The main issue is the recurring one – the lets have a little, some or no MMT narrative. This misconception regularly crops up in social media (blog posts, Twitter etc) and tells me that people are still not exactly clear about what MMT is, even those who hold themselves as speaking for MMT in one way or another. As I have written often, MMT is not a regime that you ‘apply’ or ‘switch to’ or ‘introduce’.
An application of this misconception is prominent at the moment in the Green New Deal discussions. The argument appears to be that we should not tie progressive policies (for example, the Green New Deal) to Modern Monetary Theory (MMT) given the hostility that many might have for the latter but who are sympathetic with the former. Apparently, it is better to couch the Green New Deal in mainstream macroeconomic concepts to make the idea acceptable to the population. That sounds like accepting Donald Trump’s current ravings about the scourge of socialism. It amounts to deliberately lying to the public about one aspect of the economics of the GND just to get support for the interventions. I doubt anyone who thinks democracy is a good thing would support such a public scam. And so it goes....
I think that there are three issues here that need to be distinguished and addressed separately, in that there are three aspects of MMT:
  1. The accounting-based insitutional description of monetary systems and their operations. This is a matter of correctly describing a system in terms of the laws, regulations, practices, etc., involved. While there is some controversy in this regard, most of the issues are straightforward and decidable based on evidence.
  2. The theoretical aspect that imputes causality to some processes. Interpretation of causality hangs on evidence, but also interpretation, especially framing, to some extent.
  3. The policy aspect. which involves choice among tradeoffs based on some criteria that are normative. Thus, this is not only an economic issue but also a political one.
More people are coming to see #1 in terms of MMT. Fewer in terms of #2, and there is wide disagreement regarding #3 based on political and ideological prioritization of criteria that involve values.

A good deal of misunderstanding seems to stem from lack of clarity about these distinctions, and well, as lack of understanding of each of the areas. The cause is that most people get their information and opinions from social media and few people are familiar with the MMT literature, even MMT proponents. The result is confusion.

Now that MMT is generating so much controversy on social media is it impossible to set the confusion straight. That is the tradeoff for going viral. It's going to get messy.

In addition, based on experience I don't think that it is possible to address divisive ideological objections, regardless of whether they are based on either dogma or values. Usually, it is both. What to say to those who don't believe that unemployment is actually an issue? Or, those who assume "real money" is gold? Or those who assume that natural spontaneous order entails culling the population by letting the weak fall through the cracks and so we should let nature take its course instead of interfering based on "public purpose."

While the values divide may be great in many cases, enough people share similar values to be reachable, and even those that may deeply disagree that at least agree that values have some rational justification and aren't just subjective preferences. At the same time, it is impossible to reason with those whose frame is incompatible with one's own.

But most people are reachable, and the "rational" ones anyway can be reached based on reasoning that is documented.

A simple way to approach this welcome phenomenon of MMT going viral would be to generate a comprehensive reference to the MMT literature in terms of subject matter, along with links to documentation.

This is a must-read post. It's short.

Bill Mitchell – billy blog
The erroneous ‘lets have a little, some or no MMT’ narrative
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

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