MMT streetfighting
It’s nice to see that some of the traditions of the old economics blogosphere have carried into this ugly new world where everyone is a professional and markers of status and quality crowd out most vestiges of joy, and most useful conversation. In particular, it seems that every few years we still get a recrudescence of MMT wars — arguments over the shard of post-Keynesian heterodoxy that goes by the name “Modern Monetary Theory”. MMT has gained new prominence recently. They say AOC name-checked it! And that, of course, is the chattering-class equivalent of throwing a sheep into a piranha tank. Watch the waters roil! Care to take a dip? People who seem to really like me on Twitter keep trying to push me in. The water’s nice, they say. It’s getting hot out here.
For now, I’m just going to curate a list of some recent contributions to the scuffle. (I may add more.)
I hope I’ll offer a few small comments in later posts.
A lot of recent attacks on MMT are because of their strange behaviour when asked about taxes for the rich.
This Kelton article is clear about their stand on taxes:
https://www.bloomberg.com/opinion/articles/2019-02-01/rich-must-embrace-deficits-to-escape-taxes
Tries hard to argue that tax rates on the rich ought not to be increased.
Worse, they do doublespeak and come and claim that they’ve always argued for high tax rates for high incomes etc.
But their opponents are driven by this extreme behaviour to sound finance. Like Matt Bruenig.
Sadly MMT has spread this binary: sound finance or no tax rate hike for high incomes and other kinds of taxes, say on wealth, holding gains etc.
March 1st, 2019 at 11:47 pm PST
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[…] thing I think worth pointing out about the recent MMT controversializing is there are (at least) three levels, related but distinct, at which these arguments take […]
March 3rd, 2019 at 8:38 pm PST
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Embedded in the arguments are assumptions about ROI, but unstated. Krugman, by my read, must assume negative ROI on public projects in order to create the ills he describes.
Ignored among ALL the participants is the problem of positive NPV public investments. How the heck can any public entity create trouble by investing at a gain, no matter HOW they finance it? How did the form of finance become such a big deal to economists?
March 5th, 2019 at 8:13 am PST
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One thing about MMT – it always assumes, to paraphrase spiderman, that with great money spending power, comes great money spending responsibility. Uh, considering our current president, Hillary Clinton – WHA!?!! Trump won? INCONCEIVABLE!!!! what would this president’s unlimited fiscal budget be??? Hmmmm….maybe
1. reinstitute the draft as a means to “full employment” And we can’t have a bunch of non-utilized resources – fight a war, or two.
2. Fund wars in Venezuela, Yemen (I know we’re in Yemen, I mean bigger and even more expensive), and Iran. Maybe North Korea…
3. One hundred meter high wall. And why stop at Mexico??? There are a lot of liberals in Canada that we have to protect ourselves from….
4. Shouldn’t ALL sports colosseums be rebuilt at public expense for private gain as monuments to our glorious NFL and country?
5. Square the number of lanes in all our interstates – 2 lanes become 4, 4 lanes become 16, and 8 lanes become 64.
6. and so on….
March 5th, 2019 at 10:23 am PST
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This list of MMT articles is “curated”? There has been so much misinformation spread about MMT by people who simply have not read ANY of its 20 year academic record, nearly all of which is available online. The Robert Waldmann MMT II article begins, “I don’t know much about MMT, but I am going to write about it anyway”, which he proceeds to demonstrate in ways that can only be described as ludicrous. That first sentence is a hell of a catch line though. It would serve as a fitting umbrella for nearly all of what has passed for “analysis” of MMT on the web, in the last month alone.
There is a simple and sure way to familiarize oneself with MMT. Read the source material. It is not a major undertaking — most of it is quite accessible.
http://moslereconomics.com/mandatory-readings/innocent-frauds
http://neweconomicperspectives.org/modern-monetary-theory-primer.html
http://izvor-denarja.si/wp-content/uploads/2012/08/S.-Fullwiller-MMT.pdf
March 5th, 2019 at 9:27 pm PST
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[…] MMT streetfighting Steve Randy Waldman March 1st, 2019 – https://www.interfluidity.com […]
March 7th, 2019 at 3:00 am PST
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Hi Steve.
My thoughts on Kelton’s “set public spending always to the level required to achieve full employment” remark: What she said.
March 11th, 2019 at 1:29 am PDT
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I agree with Chuck Stephanski that a lot of the critiques of MMT have been written by people who do not understand it well. That is somewhat ironic in that the major value of MMT, in my opinion, is in being a clear description of how our economy and monetary system works.
The main points are not very controversial:
– The currency-issuing government is not financially constrained in the same manner as a household or private business.
– Money and monetary transactions can be viewed through an accounting perspective to better understand what is going on. Thus, for example, government debts are assets to the private sector.
– Automatic fiscal stabilizers (e.g. income tax, welfare benefits) are effective in managing the economy.
– Financial instability is a factor in modern economies. Governments should regulate the financial system proactively rather than bailing out big financial institutions out of necessity.
– Monetary policy (manipulation of interest rates) does not work as advertised.
March 13th, 2019 at 8:21 am PDT
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[…] I can’t keep track of all of these, but interfluidity has a good roundup of the MMT Wars: MMT streetfighting […]
March 20th, 2019 at 4:58 pm PDT
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