Saturday, February 2, 2019

Brian Romanchuk — Why Are MMT Critiques Generally Terrible?

The deluge of bad Modern Monetary Theory (MMT) critiques continues. Although it is possible that there are some diamonds in the rough, all the articles I read were downright stinkers. They were so bad that I refuse to dignify their existence by even citing them. However, as someone in the MMT camp, I just want to give a few pointers for my readers as to why those critiques stink.
There certainly are legitimate critiques of MMT, but they are hard to find. Even academics end up citing poor critiques written by non-MMTers; nobody can be apparently bothered to read the MMT academic literature. Which is a rather troubling commentary on the diseased state of modern academia (speaking as a hardline old school ex-academic). In this article, I just cover the ludicrous arguments; I will let the reader try to find some reasonable ones elsewhere. I am in the middle of developing an investment accelerator model within my Python SFC model framework, and I do not want to waste my time beating up on clowns....
Bond Economics
Why Are MMT Critiques Generally Terrible?
Brian Romanchuk


Konrad said...

Why are MMT critiques generally terrible?

Because they are all in error, and people try to conceal their errors with b.s.

Most attacks on MMT occur in a handful of basic forms…

Federal debt crisis!
Austrian economics is superior!
Fiat funny money! (We need a “gold standard”)

“The neoclassicals appeal to OLG models as a way to "prove" that government debt "puts a burden" on future generations.” ~ Romanchuk

Yes, just as points on a scoreboard “prove” that they are a “burden” on future sports games.

“One of the standard complaints I have seen by apologists for the mainstream (such as on Twitter) is that MMT is ‘not empirical’.” ~ Romanchuk

When money is “moved” from one account to another, we simply change the numbers, debiting one account and crediting a different account. Nothing physical moves. Therefore money has no physical existence. Anyone can see this empirically with his own eyes, yet MMT opponents deny empirical reality.

Opposition to MMT is never logical. It is always ideological. It is not a failing of intellect, but of moral character.

AXEC / E.K-H said...

MMT vs The Rest of Economics ― a Punch and Judy show
Comment on Brian Romanchuk on ‘Why Are MMT Critiques Generally Terrible?’

There is the political sphere where, in principle, everybody is admitted. The currency in the political sphere is opinion. Opinion is different from knowledge and the fact of the matter is that it is most of the time false or merely commonsensically true.

“There are always many different opinions and conventions concerning any one problem or subject-matter... This shows that they are not all true. For if they conflict, then at best only one of them can be true. Thus it appears that Parmenides ... was the first to distinguish clearly between truth or reality on the one hand, and convention or conventional opinion (hearsay, plausible myth) on the other ...” (Popper)

The discourse in the political sphere has not much to do with truth or reality but with myth, storytelling, gossip, second-guessing, propaganda, belief, paranoia, disinformation, and entertainment.

The very opposite of opinion is knowledge. Science is about knowledge. Science is binary true/false and NOTHING in between. Non-science is the swamp between true and false where ‘nothing is clear and everything is possible’ (Keynes). The distinction between science and non-science corresponds to the ancient Greek’s distinction between episteme (= knowledge) and doxa (= opinion).

Science is for 2000+ years defined by material and formal consistency. Logical consistency is secured by applying the axiomatic-deductive method and empirical consistency is secured by applying state-of-art testing.

“In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)

What the general public cannot see is that economists do not have the true theory. The fact of the matter is that the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the pivotal concept of the subject matter ― profit ― wrong.

See part 2

AXEC / E.K-H said...

Part 2

The lethal critique of MMT is that its macroeconomic foundations are provably false. So, the gigantic opinion/critique/polemic/disinformation bubble about MMT’s deficit-spending/money-creation, inflation, taxation, the debt burden, the Job Guarantee, etcetera boils scientifically down to the question which of the two foundational macroeconomic equations is true, i.e. materially and formally consistent:
• the MMT sectoral balances equation: (I−S)+(G−T)+(X−M)=0 or
• the axiom based balances equation: (I−S)+(G−T)+(X−M)−(Qm−Yd)=0.#2

Note that this is NOT a question about opinion or political preferences but a clear-cut true/false question which can be unambiguously decided according to well-established scientific criteria.

The answer is that the MMT equation is logically/mathematically false. Because of this, the whole analytical superstructure of MMT is false.#3, #4, #5, #6, #7 This settles the matter. MMT is dead and buried at the Flat-Earth-Cemetery just like Walrasianism, Keynesianism, Marxianism, and Austrianism.

This, though, does not stop Brian Romanchuk, MMTers, and the rest of economists from blathering as if there were no tomorrow. In order to understand this phenomenon, one has to drop the presumption that economics has anything to do with science or that economists are scientists. For 200+ years now, economics is a fake science and economists are either clowns or fraudsters in the political Circus Maximus.

Egmont Kakarot-Handtke

#1 The economist as standup comedian

#2 Wikipedia and the promotion of economists’ idiotism (II)

#3 MMT: How to get out of the infinite meta-communication loop

#4 Brian Romanchuk’s Post-Keynesian idiocy

#5 Economics as tireless production of proto-scientific toilet paper: inflation theory as an example

#6 Truth by definition? The Profit Theory is axiomatically false for 200+ years

#7 MMT: How mathematical incompetence helps the Kelton-Fraud