Like hostile tribes doomed over centuries to share the same tiny valley
March 5, 2019 7:42 PM Subscribe
Three levels of controversy over MMT - "Economics debates are often passionate, and frequently become too personal. But MMT debates are stuck on infinite recursion, and they take place in a thunderdrome entirely their own." (also btw: MMT streetfighting, MMT stabilization policy — some comments & critiques, The MMT solvency constraint, Translating "net financial assets", A note on model risk, policy design, and political alliances and Because the stakes are so small?)*
and I thought MMT stood for Magical Mystery Tour...
posted by oneswellfoop at 8:51 PM on March 5, 2019 [8 favorites]
posted by oneswellfoop at 8:51 PM on March 5, 2019 [8 favorites]
The Magical Mystery Tour streetfights were truly awful and were left out of the final film.
posted by hippybear at 8:52 PM on March 5, 2019 [16 favorites]
posted by hippybear at 8:52 PM on March 5, 2019 [16 favorites]
So it's not Mixed Martial Tarts?
posted by traveler_ at 9:28 PM on March 5, 2019 [34 favorites]
posted by traveler_ at 9:28 PM on March 5, 2019 [34 favorites]
I was just coming in to post the Wikipedia page.
posted by bendy at 10:27 PM on March 5, 2019 [4 favorites]
posted by bendy at 10:27 PM on March 5, 2019 [4 favorites]
WHAT’S MISSING FROM THE MOST IMPORTANT DEBATE ON THE LEFT
"For decades now, Republican administrations have created enormous deficits with regressive, inequality-widening tax cuts, then turned around and cited those very deficits as a pretext to demand that their Democratic successors adopt austerity budgets without raising taxes at all.
This is the essence of the “starve the beast” theory. [...] Their ultimate goal is to repeat this process until either the welfare state as we know it withers on the vine, or deficits trigger the very inflation MMT advocates identify as the ultimate political constraint. At that point, they imagine Republicans will link arms, refuse to raise taxes, and confront America with a choice between enduring economic misery and the bipartisan abolition of Medicare, Social Security, and other lasting progressive achievements.
It was against that backdrop that MMT began making headway on the left. Only later, in response to stagnant wages, the Republican assault on the Affordable Care Act, ecological crisis, and Donald Trump, did the progressive agenda shift leftward. And only since then has MMT become an answer to the answer to inevitable, one-sided questions about how progressives intend to pay for it. [...]
I don’t know whether MMT per se is the most effective possible strategic approach to creating and cementing Nordic-style social democracy in the U.S. But I do know that Democrats need to break the political cycle that took hold in the Reagan era where Republicans govern under expansionary fiscal policies that transfer tons of money up the income scale, and Democrats govern under pay-as-you-go constraints. MMT is useful because it’s a specific, articulable way of describing national finance that provides Democrats an answer to starve the beast.
And one way or another Democrats need an answer to it."
posted by moorooka at 10:51 PM on March 5, 2019 [6 favorites]
"For decades now, Republican administrations have created enormous deficits with regressive, inequality-widening tax cuts, then turned around and cited those very deficits as a pretext to demand that their Democratic successors adopt austerity budgets without raising taxes at all.
This is the essence of the “starve the beast” theory. [...] Their ultimate goal is to repeat this process until either the welfare state as we know it withers on the vine, or deficits trigger the very inflation MMT advocates identify as the ultimate political constraint. At that point, they imagine Republicans will link arms, refuse to raise taxes, and confront America with a choice between enduring economic misery and the bipartisan abolition of Medicare, Social Security, and other lasting progressive achievements.
It was against that backdrop that MMT began making headway on the left. Only later, in response to stagnant wages, the Republican assault on the Affordable Care Act, ecological crisis, and Donald Trump, did the progressive agenda shift leftward. And only since then has MMT become an answer to the answer to inevitable, one-sided questions about how progressives intend to pay for it. [...]
I don’t know whether MMT per se is the most effective possible strategic approach to creating and cementing Nordic-style social democracy in the U.S. But I do know that Democrats need to break the political cycle that took hold in the Reagan era where Republicans govern under expansionary fiscal policies that transfer tons of money up the income scale, and Democrats govern under pay-as-you-go constraints. MMT is useful because it’s a specific, articulable way of describing national finance that provides Democrats an answer to starve the beast.
And one way or another Democrats need an answer to it."
posted by moorooka at 10:51 PM on March 5, 2019 [6 favorites]
I strongly question the idea that MMT is "articulable" or "good politics."
I'm pretty sure that's worse than the Fed hiking interest rates to fight fears of inflation, causing a recession which costs the left its majority and harms its credibility, as that probably lasts only or an election cycle or two.
Both of these assume MMT is correct and only address the politics. If you only think about within-progressive-circles politics (as the author pretty explicitly does) I do agree it's a decent rhetorical move. Otherwise no.
Maybe you're thinking that the right got away with variations of the Laffer curve for a few decades. This is true but if you think counter-intuitive leftist economic arguments will be treated with the same agnosticism, well, you haven't been hate listening to NPR during your morning commute.
posted by mark k at 11:37 PM on March 5, 2019 [9 favorites]
Suppose a very progressive govt says “Yes, #MMT is right, we have all the financial resources we need” and starts working on implementing a #GreenNewDeal, #JobGuarantee, #M4A etc etc. What’s the worst that could possibly happen from the POV of all fervent Left MMT critics?The mainstream press and Senators from purple states revolt, the ability of the government to pass any progressive legislation is shattered and the left loses credibility for a couple decades, during which even worse effects of global warming are locked in?
I'm pretty sure that's worse than the Fed hiking interest rates to fight fears of inflation, causing a recession which costs the left its majority and harms its credibility, as that probably lasts only or an election cycle or two.
Both of these assume MMT is correct and only address the politics. If you only think about within-progressive-circles politics (as the author pretty explicitly does) I do agree it's a decent rhetorical move. Otherwise no.
Maybe you're thinking that the right got away with variations of the Laffer curve for a few decades. This is true but if you think counter-intuitive leftist economic arguments will be treated with the same agnosticism, well, you haven't been hate listening to NPR during your morning commute.
posted by mark k at 11:37 PM on March 5, 2019 [9 favorites]
Just to expand briefly on the above: Obamacare reduced the long term deficit drastically by every impartial mainstream estimate and was still treated as an expense by the press and bad play politically in 2010.
posted by mark k at 11:40 PM on March 5, 2019 [15 favorites]
posted by mark k at 11:40 PM on March 5, 2019 [15 favorites]
Sorry but it is simply"greed over governance," all the way down.
posted by Fupped Duck at 12:28 AM on March 6, 2019 [3 favorites]
posted by Fupped Duck at 12:28 AM on March 6, 2019 [3 favorites]
Even if MMT is correct one should implement taxes on the rich to pay for social programs anyway because then rich people have less money.
posted by Space Coyote at 1:35 AM on March 6, 2019 [12 favorites]
posted by Space Coyote at 1:35 AM on March 6, 2019 [12 favorites]
Just to expand briefly on the above: Obamacare reduced the long term deficit drastically by every impartial mainstream estimate and was still treated as an expense by the press and bad play politically in 2010.
well doesn’t that just suggest that there’s absolutely nothihg to be gained politically by containing the deficit, so why even bother? The Republicans certainly don’t; they “get” that deficits don’t matter when they’re in power, but when they’re out of power suddenly pretend he opposite, and the Democrats play along. The whole point of MMT is to demonstrate that concerns about the deficit are purely ideological, as is the Fed’s interest rate regime, and we don’t have to play that game, regardless of what some economically illiterate hack on NPR might have to say.
posted by moorooka at 2:04 AM on March 6, 2019 [5 favorites]
well doesn’t that just suggest that there’s absolutely nothihg to be gained politically by containing the deficit, so why even bother? The Republicans certainly don’t; they “get” that deficits don’t matter when they’re in power, but when they’re out of power suddenly pretend he opposite, and the Democrats play along. The whole point of MMT is to demonstrate that concerns about the deficit are purely ideological, as is the Fed’s interest rate regime, and we don’t have to play that game, regardless of what some economically illiterate hack on NPR might have to say.
posted by moorooka at 2:04 AM on March 6, 2019 [5 favorites]
My concerns over MMT are not about the economics of it. I'm no economist, but I have no doubt that there are myriad solutions available to us if we break free of the right-wing hegemony that controls economic debate.
My concerns are that it seems politically weak. It seems like something that can be easily defeated in the mind of the public by bringing out a pet economist or two. Much in the way of climate change, where broad consensus is no barrier to a public perception of doubt and academic conflict.
It seems to me to avoid the difficult challenges of explaining that our woes may be paid at the feet of private capital, of marshalling grassroots support for state action. We need populism, we need politicisation and polemicisation.
I don't think the barriers have ever been truly economic, and therefore doing away with economic barriers seems ineffective. It is political will that is required.
posted by AnhydrousLove at 3:37 AM on March 6, 2019 [3 favorites]
My concerns are that it seems politically weak. It seems like something that can be easily defeated in the mind of the public by bringing out a pet economist or two. Much in the way of climate change, where broad consensus is no barrier to a public perception of doubt and academic conflict.
It seems to me to avoid the difficult challenges of explaining that our woes may be paid at the feet of private capital, of marshalling grassroots support for state action. We need populism, we need politicisation and polemicisation.
I don't think the barriers have ever been truly economic, and therefore doing away with economic barriers seems ineffective. It is political will that is required.
posted by AnhydrousLove at 3:37 AM on March 6, 2019 [3 favorites]
MMT is one of those abbreviations that, when expanded, tells you nothing about what it is. That in itself makes it seem suspicious.
posted by phooky at 3:53 AM on March 6, 2019 [15 favorites]
posted by phooky at 3:53 AM on March 6, 2019 [15 favorites]
I have the sense that technical economic issues, like this one, are quite important. They're one of the Real Issues that should be informing our individual votes, political donations, broader politics, etc.
However, I also know that I don't fuckin' understand economics – monetary theory least of all. I can grok individual concepts in isolation – sometimes. But I feel like you have to be a full-time economics wonk to really understand anything worth voting or having an opinion on. I mean, shit – I can't even figure out my 401(k).
When I go searching for information – as I've occasionally done – I quickly run into ideologues who are eager to sell their model as the sane, factual one, and to disparage competing ideologies as wacky, misinformed cranks. (And 98% of these people don't know what the fuck they're talking about anyway, because the internet.)
And I'm a reasonably smart, engaged guy with too much free time.
Holy crap. This is how most of America experiences science, isn't it? (That's one area where I do feel on reasonably stable ground.) That would certainly explain a lot. And I probably feel more comfortable with the sciences because I had public-school educators who equipped me with that foundation. I would say that we should consider adding economics to our basic curriculum – but, hell, we can barely teach kids science thanks to the influence of political ideology.
posted by escape from the potato planet at 4:16 AM on March 6, 2019 [9 favorites]
However, I also know that I don't fuckin' understand economics – monetary theory least of all. I can grok individual concepts in isolation – sometimes. But I feel like you have to be a full-time economics wonk to really understand anything worth voting or having an opinion on. I mean, shit – I can't even figure out my 401(k).
When I go searching for information – as I've occasionally done – I quickly run into ideologues who are eager to sell their model as the sane, factual one, and to disparage competing ideologies as wacky, misinformed cranks. (And 98% of these people don't know what the fuck they're talking about anyway, because the internet.)
And I'm a reasonably smart, engaged guy with too much free time.
Holy crap. This is how most of America experiences science, isn't it? (That's one area where I do feel on reasonably stable ground.) That would certainly explain a lot. And I probably feel more comfortable with the sciences because I had public-school educators who equipped me with that foundation. I would say that we should consider adding economics to our basic curriculum – but, hell, we can barely teach kids science thanks to the influence of political ideology.
posted by escape from the potato planet at 4:16 AM on March 6, 2019 [9 favorites]
That's an interesting point. Is there an economics equivalent to a science communicator? Jim Cramer et al don't really count...
posted by phooky at 4:28 AM on March 6, 2019 [1 favorite]
posted by phooky at 4:28 AM on March 6, 2019 [1 favorite]
MMT is not an explanatory model or hypothesis, it is simply a body of knowledge about how fiat currencies - “modern money” - actually work. And the central insight is very trivial: fiat currencies are fiat. But the implications of this trivial point are quite profound; the United States cannot go insolvent because of a US dollar debt. This means that whenever this supposedly enormous debt is held up (either by Republicans or Democrats) as a reason why “we can’t have nice things” - you are being bullshitted. You are being bullshitted by people who rely on a general lack of understanding about modern money to control the debate. MMT is a means of intellectual self defence against this bullshit.
posted by moorooka at 4:39 AM on March 6, 2019 [20 favorites]
posted by moorooka at 4:39 AM on March 6, 2019 [20 favorites]
Exactly. The central observation that comes out of MMT is that the Federal budget is completely unlike a household or even state budget in several key ways. So much so that, IMO, it probably doesn't even make sense to use the same word for both concepts.
posted by tobascodagama at 5:29 AM on March 6, 2019
posted by tobascodagama at 5:29 AM on March 6, 2019
Interest rates wouldn’t even matter when all loans are funded from the MMT machine.
FWIW I’m totally cool with MMT printing being directed to bond-fide capital accretion like new housing, mass transit.
Print the money to lend out and let the loan repayments + interest pull it all back in.
The stupid thing about economics is that the economy itself isn’t all that dismal, AFAICT we create much more wealth overall than is consumed.
Deal is though nobody really knows what “wealth” is.
posted by Heywood Mogroot III at 5:55 AM on March 6, 2019 [1 favorite]
FWIW I’m totally cool with MMT printing being directed to bond-fide capital accretion like new housing, mass transit.
Print the money to lend out and let the loan repayments + interest pull it all back in.
The stupid thing about economics is that the economy itself isn’t all that dismal, AFAICT we create much more wealth overall than is consumed.
Deal is though nobody really knows what “wealth” is.
posted by Heywood Mogroot III at 5:55 AM on March 6, 2019 [1 favorite]
I'm pretty sure when someone points out that the economy is pretty good they're not talking about the level I live on where the are very few decent paying jobs and it's obvious that current economic policy mean that the rich are just pissing on you and telling you it's raining.
posted by evilDoug at 6:03 AM on March 6, 2019 [1 favorite]
posted by evilDoug at 6:03 AM on March 6, 2019 [1 favorite]
Paul Krugman doesn't like MMT, so I don't like MMT.
posted by diogenes at 6:22 AM on March 6, 2019 [2 favorites]
posted by diogenes at 6:22 AM on March 6, 2019 [2 favorites]
Even if MMT is correct one should implement taxes on the rich to pay for social programs anyway because then rich people have less money.
Sometimes I can't tell if (when?) right-wing-nuts are impersonating left-wing-nuts just to make the left look like a parody of itself.
(I say this as someone who's strongly in favor of the type of redistributionist tax policy that is way to the left of anything that is politically feasible today. But not because I hate rich people, but because if they buy a $5 million yacht instead of a $50 million yacht, they will be just as happy, but that's $45 million for food, housing, education, or health care for people who actually need those things.)
posted by Mr.Know-it-some at 6:35 AM on March 6, 2019 [1 favorite]
Sometimes I can't tell if (when?) right-wing-nuts are impersonating left-wing-nuts just to make the left look like a parody of itself.
(I say this as someone who's strongly in favor of the type of redistributionist tax policy that is way to the left of anything that is politically feasible today. But not because I hate rich people, but because if they buy a $5 million yacht instead of a $50 million yacht, they will be just as happy, but that's $45 million for food, housing, education, or health care for people who actually need those things.)
posted by Mr.Know-it-some at 6:35 AM on March 6, 2019 [1 favorite]
well, that, and also 50 million dollar yachts tend to be monstrously tacky. 5 million dollar yachts tend to be pretty tacky as well. really once you're spending more than six figures on a boat, you're definitely making a terrible choice.
rich people: don't think of it as the dictatorship of the proletariat seizing and redistributing your wealth. think of it as the dictatorship of the proletariat helpfully protecting you from making embarrassing decisions.
posted by Reclusive Novelist Thomas Pynchon at 6:44 AM on March 6, 2019 [12 favorites]
rich people: don't think of it as the dictatorship of the proletariat seizing and redistributing your wealth. think of it as the dictatorship of the proletariat helpfully protecting you from making embarrassing decisions.
posted by Reclusive Novelist Thomas Pynchon at 6:44 AM on March 6, 2019 [12 favorites]
MMT is not an explanatory model or hypothesis, it is simply a body of knowledge about how fiat currencies - “modern money” - actually work. And the central insight is very trivial: fiat currencies are fiat. But the implications of this trivial point are quite profound; the United States cannot go insolvent because of a US dollar debt. This means that whenever this supposedly enormous debt is held up (either by Republicans or Democrats) as a reason why “we can’t have nice things” - you are being bullshitted. You are being bullshitted by people who rely on a general lack of understanding about modern money to control the debate. MMT is a means of intellectual self defence against this bullshit.
I read a post-mortem of the junk bond fiasco once, which cost hundreds of billions in taxpayer money and was probably a vision of what Republicans see as good welfare, ie, for risky investments only, not normal people. The bottom line from examiners and critics: "Nobody saw the pirates coming." Except the pirates perhaps. I would have more trust in a government ledger that proved itself in theory, not assumed as faith, even by running simulations to make a point. History has unlimited examples where reserves of supporters were asked to back an initiative or a revolution on this or that threat or attack, but they were misled.
posted by Brian B. at 6:47 AM on March 6, 2019
I read a post-mortem of the junk bond fiasco once, which cost hundreds of billions in taxpayer money and was probably a vision of what Republicans see as good welfare, ie, for risky investments only, not normal people. The bottom line from examiners and critics: "Nobody saw the pirates coming." Except the pirates perhaps. I would have more trust in a government ledger that proved itself in theory, not assumed as faith, even by running simulations to make a point. History has unlimited examples where reserves of supporters were asked to back an initiative or a revolution on this or that threat or attack, but they were misled.
posted by Brian B. at 6:47 AM on March 6, 2019
Jim Cramer et al don't really count...
Maybe Merle tallies?
posted by otherchaz at 7:01 AM on March 6, 2019 [1 favorite]
Maybe Merle tallies?
posted by otherchaz at 7:01 AM on March 6, 2019 [1 favorite]
The left should just quote Cheney :
You know, Paul, Reagan proved that deficits don't matter. We won the mid-term elections, this is our due.
posted by rfs at 7:31 AM on March 6, 2019 [2 favorites]
You know, Paul, Reagan proved that deficits don't matter. We won the mid-term elections, this is our due.
posted by rfs at 7:31 AM on March 6, 2019 [2 favorites]
Regarding trust, MMT has shown itself to be more accurate than "standard" macro when making predictions about such things as national government debt issues in the Eurozone and outside, and the impact of quantitative easing.
As to the junk bond fiasco, one major point of MMT is that "taxpayer money" is a misnomer: tax payments don't affect how much money the federal government can spend. Like the Republican tax cuts, it was simply a handout to rich people ("I call you my base").
posted by froghopper at 7:38 AM on March 6, 2019
As to the junk bond fiasco, one major point of MMT is that "taxpayer money" is a misnomer: tax payments don't affect how much money the federal government can spend. Like the Republican tax cuts, it was simply a handout to rich people ("I call you my base").
posted by froghopper at 7:38 AM on March 6, 2019
I'm not sure if this is accurate but if you're like me and still didn't understand what MMT was despite reading the Wikipedia page and trying to follow the conversation here, this Reddit ELI5 post might be your ticket.
posted by chrominance at 7:43 AM on March 6, 2019 [1 favorite]
posted by chrominance at 7:43 AM on March 6, 2019 [1 favorite]
Sometimes I can't tell if (when?) right-wing-nuts are impersonating left-wing-nuts just to make the left look like a parody of itself.
Here's a take you'll love then: The second best thing to do with a billionaire's money is to set it on fire, slightly better is to give it to the poor. The worst thing you can do is let them keep it, because you can only buy so many yachts, and they use rest to wage war on the working class.
I feel like MMT was pushed as an alternative under the assumption that taxing the rich would be unpopular. Now we know it's actually wildly popular, so we don't need to try to explain an economic theory to people to get them on board with closing the wealth gap.
posted by Space Coyote at 7:49 AM on March 6, 2019 [10 favorites]
Here's a take you'll love then: The second best thing to do with a billionaire's money is to set it on fire, slightly better is to give it to the poor. The worst thing you can do is let them keep it, because you can only buy so many yachts, and they use rest to wage war on the working class.
I feel like MMT was pushed as an alternative under the assumption that taxing the rich would be unpopular. Now we know it's actually wildly popular, so we don't need to try to explain an economic theory to people to get them on board with closing the wealth gap.
posted by Space Coyote at 7:49 AM on March 6, 2019 [10 favorites]
well doesn’t that just suggest that there’s absolutely nothihg to be gained politically by containing the deficit, so why even bother?
Not how I read things at the time. Obamacare was a short term major expenditure and over 10 years was neutral. Trying the public argument that over 50 years it would help a lot was arguing something counterintuitive (like the pop version of MMT). If deficits had come down right away (without taxes going up, of course) the politics would have been different.
The whole point of MMT is to demonstrate that concerns about the deficit are purely ideological, as is the Fed’s interest rate regime, and we don’t have to play that game, regardless of what some economically illiterate hack on NPR might have to say.
Concerns about the deficit are not purely ideological. Rhetoric about it from Republican congressman is, yes. But a lot of folks would like 'stuff' (in the sense of medical care or a better safety net or infrastructure) if it can be afforded. And I know a great many vaguely liberal people in that category who, for example, oppose the tax cuts because they worry about the debt it leaves the next generation.
In reality MMT is not a get out of jail free card. Massive expenditures need offsets or induce inflation, so the question of who pays for it is relevant. Either taxes go up (reducing your purchasing power) or costs go up (also reducing your purchasing power.)
MMT is not an explanatory model or hypothesis, it is simply a body of knowledge about how fiat currencies - “modern money” - actually work. And the central insight is very trivial: fiat currencies are fiat. But the implications of this trivial point are quite profound; the United States cannot go insolvent because of a US dollar debt. This means that whenever this supposedly enormous debt is held up (either by Republicans or Democrats) as a reason why “we can’t have nice things” - you are being bullshitted. You are being bullshitted by people who rely on a general lack of understanding about modern money to control the debate. MMT is a means of intellectual self defence against this bullshit.
MMT is indeed a hypothesis. It makes different predictions from its belies about how the economy will react to large deficits than traditional economics, and not because traditional economics doesn't get that people can print money.
In principle the different predictions would be testable since the taxation level recommended by the two analyses in response to a large expenditure is different.
posted by mark k at 7:53 AM on March 6, 2019 [2 favorites]
Not how I read things at the time. Obamacare was a short term major expenditure and over 10 years was neutral. Trying the public argument that over 50 years it would help a lot was arguing something counterintuitive (like the pop version of MMT). If deficits had come down right away (without taxes going up, of course) the politics would have been different.
The whole point of MMT is to demonstrate that concerns about the deficit are purely ideological, as is the Fed’s interest rate regime, and we don’t have to play that game, regardless of what some economically illiterate hack on NPR might have to say.
Concerns about the deficit are not purely ideological. Rhetoric about it from Republican congressman is, yes. But a lot of folks would like 'stuff' (in the sense of medical care or a better safety net or infrastructure) if it can be afforded. And I know a great many vaguely liberal people in that category who, for example, oppose the tax cuts because they worry about the debt it leaves the next generation.
In reality MMT is not a get out of jail free card. Massive expenditures need offsets or induce inflation, so the question of who pays for it is relevant. Either taxes go up (reducing your purchasing power) or costs go up (also reducing your purchasing power.)
MMT is not an explanatory model or hypothesis, it is simply a body of knowledge about how fiat currencies - “modern money” - actually work. And the central insight is very trivial: fiat currencies are fiat. But the implications of this trivial point are quite profound; the United States cannot go insolvent because of a US dollar debt. This means that whenever this supposedly enormous debt is held up (either by Republicans or Democrats) as a reason why “we can’t have nice things” - you are being bullshitted. You are being bullshitted by people who rely on a general lack of understanding about modern money to control the debate. MMT is a means of intellectual self defence against this bullshit.
MMT is indeed a hypothesis. It makes different predictions from its belies about how the economy will react to large deficits than traditional economics, and not because traditional economics doesn't get that people can print money.
In principle the different predictions would be testable since the taxation level recommended by the two analyses in response to a large expenditure is different.
posted by mark k at 7:53 AM on March 6, 2019 [2 favorites]
Mark, I think you're doing government a disservice by only considering the cost impact of its expenditures "reducing your purchasing power". The whole point of having a government is to enact policies that improve people's lives. For instance, public infrastructure, education, and healthcare expenditures should also be expected to increase productivity (up to a point, if competently enacted), which means that private purchasing power goes up across the board since the economy is producing more value. Of course, the real resources available in these sectors govern how much their prices go up, but the increased costs are also borne by different actors who will shift their consumption in response. It's complicated, so a dollar-for-dollar offset like PAYGO is not even a good place to start.
posted by froghopper at 8:12 AM on March 6, 2019 [3 favorites]
posted by froghopper at 8:12 AM on March 6, 2019 [3 favorites]
Is there an economics equivalent to a science communicator?
This is what think-tanks and policy schools spend a lot of time doing, but with policymakers (incl each other) as their targets instead of "interested laymen."
posted by GCU Sweet and Full of Grace at 8:31 AM on March 6, 2019 [4 favorites]
This is what think-tanks and policy schools spend a lot of time doing, but with policymakers (incl each other) as their targets instead of "interested laymen."
posted by GCU Sweet and Full of Grace at 8:31 AM on March 6, 2019 [4 favorites]
The whole point of having a government is to enact policies that improve people's lives.
I think this is where people fall off the wagon about economics, as they view it as kind of a morality play. IE: that 'economics' must also occasionally ruin people's lives (through recessions, high interest rates on 'risky' debt) whatever, and they view that as a positive, even if they aren't willing to admit it.
posted by The_Vegetables at 8:46 AM on March 6, 2019 [4 favorites]
I think this is where people fall off the wagon about economics, as they view it as kind of a morality play. IE: that 'economics' must also occasionally ruin people's lives (through recessions, high interest rates on 'risky' debt) whatever, and they view that as a positive, even if they aren't willing to admit it.
posted by The_Vegetables at 8:46 AM on March 6, 2019 [4 favorites]
MMT is one of those abbreviations that, when expanded, tells you nothing about what it is. That in itself makes it seem suspicious.
Not to mention, any grand initiative with "Theory" in its title tends to raise my hackles. Perhaps I've read too much history.
When I go searching for information – as I've occasionally done – I quickly run into ideologues who are eager to sell their model as the sane, factual one, and to disparage competing ideologies as wacky, misinformed cranks. (And 98% of these people don't know what the fuck they're talking about anyway, because the internet.)
Yeah, I lean to the left on most issues but have consistently found that the more committed somebody is to Theory, the less I trust them (either too gullible or too cynical). We're humans. We're messy. Systems need to bend to our needs, our desires, our inconsistencies, not the other way around.
posted by philip-random at 9:28 AM on March 6, 2019 [1 favorite]
Not to mention, any grand initiative with "Theory" in its title tends to raise my hackles. Perhaps I've read too much history.
When I go searching for information – as I've occasionally done – I quickly run into ideologues who are eager to sell their model as the sane, factual one, and to disparage competing ideologies as wacky, misinformed cranks. (And 98% of these people don't know what the fuck they're talking about anyway, because the internet.)
Yeah, I lean to the left on most issues but have consistently found that the more committed somebody is to Theory, the less I trust them (either too gullible or too cynical). We're humans. We're messy. Systems need to bend to our needs, our desires, our inconsistencies, not the other way around.
posted by philip-random at 9:28 AM on March 6, 2019 [1 favorite]
I'm not sure if this is accurate but if you're like me and still didn't understand what MMT was despite reading the Wikipedia page and trying to follow the conversation here, this Reddit ELI5 post might be your ticket.
That seems to match my understanding well enough, yeah.
posted by tobascodagama at 9:35 AM on March 6, 2019
That seems to match my understanding well enough, yeah.
posted by tobascodagama at 9:35 AM on March 6, 2019
I recently read Max Weber's 1919 speech "Politics as a Vocation" If you haven't read it I recommend it. It articulated a lot of what I have always felt. With regard to MMT and the chattering in the valley of the damned or whatever this just seems like the usual frittering away of life that occurs in the absence of power. The old saw about the fights in academia being so vicious because so little is at stake seems applicable here.
posted by Pembquist at 10:31 AM on March 6, 2019 [1 favorite]
posted by Pembquist at 10:31 AM on March 6, 2019 [1 favorite]
It’s not just chatter, and it’s not that theoretical. And it’s the subject of dozens of articles every day now, so clearly a part of the mainstream debate. Here’s a good one by Reuters today, the color of money. An easy enough read for anybody with an interest.
posted by moorooka at 12:15 PM on March 6, 2019 [2 favorites]
posted by moorooka at 12:15 PM on March 6, 2019 [2 favorites]
Concerns about the deficit are not purely ideological. Rhetoric about it from Republican congressman is, yes. But a lot of folks would like 'stuff' (in the sense of medical care or a better safety net or infrastructure) if it can be afforded. And I know a great many vaguely liberal people in that category who, for example, oppose the tax cuts because they worry about the debt it leaves the next generation.
The value of MMT is to clarify what is meant when we say “if it can be afforded”. The constraint on what can be afforded us the full utilisation if available resources. If it is physically possible, it is financially possible.
In reality MMT is not a get out of jail free card. Massive expenditures need offsets or induce inflation, so the question of who pays for it is relevant. Either taxes go up (reducing your purchasing power) or costs go up (also reducing your purchasing power.)
MMT does not contradict this; what it points out is that the taxes do not fund the expenditure - the expenditure comes first, and the taxes drain the money supply to avoid inflation. Whether or not he expenditure produces inflation depends on how many under-utilised resources are available to be employed. The point is that the government need not need to rely on private bond-holders for liquidity - the fact that it currently does so is merely a historically contingent institutional arrangement, not a law of nature. Whether or not taxes fund expenditure is almost a matter of semantics, except that in comparing a household budget to a government budget this makes a real difference, and if you can grasp this conceptually you are immune to the sort of propaganda that makes people worry about the debt that being left to their grandkids. That debt is not a real problem in the same way that climate change is a real problem, it is a political construct and should never be used as a reason why “we cannot afford” to solve real problems.
posted by moorooka at 1:10 PM on March 6, 2019 [5 favorites]
The value of MMT is to clarify what is meant when we say “if it can be afforded”. The constraint on what can be afforded us the full utilisation if available resources. If it is physically possible, it is financially possible.
In reality MMT is not a get out of jail free card. Massive expenditures need offsets or induce inflation, so the question of who pays for it is relevant. Either taxes go up (reducing your purchasing power) or costs go up (also reducing your purchasing power.)
MMT does not contradict this; what it points out is that the taxes do not fund the expenditure - the expenditure comes first, and the taxes drain the money supply to avoid inflation. Whether or not he expenditure produces inflation depends on how many under-utilised resources are available to be employed. The point is that the government need not need to rely on private bond-holders for liquidity - the fact that it currently does so is merely a historically contingent institutional arrangement, not a law of nature. Whether or not taxes fund expenditure is almost a matter of semantics, except that in comparing a household budget to a government budget this makes a real difference, and if you can grasp this conceptually you are immune to the sort of propaganda that makes people worry about the debt that being left to their grandkids. That debt is not a real problem in the same way that climate change is a real problem, it is a political construct and should never be used as a reason why “we cannot afford” to solve real problems.
posted by moorooka at 1:10 PM on March 6, 2019 [5 favorites]
Yeah, MMT is a pretty fundamental shift in how to think about the relationship between government and the private sector. For instance, since Thatcher coopted the European social democratic parties, they have adopted balanced budget constraints, and subordinated all other policies to this demand. As a result, the welfare states are withering away.
Per MMT, government policies should instead focus on how to mobilize real resources to achieve societal goals, and make sure to deficit spend so as to fulfill the savings desires of the private sector and avoid the paradox of thrift.
Inflation is a core difference: in the current framework, tax increases on the lower and middle classes are seen as necessary to accompany increases in government spending (cf. PAYGO), and central banks raise interest rates to counter inflation by generating higher unemployment. Per MMT, government should instead create space for its spending using targeted taxes and regulation, and issue a job guarantee: pay unemployed people a living wage to do societally useful tasks.
posted by froghopper at 1:13 PM on March 6, 2019 [2 favorites]
Per MMT, government policies should instead focus on how to mobilize real resources to achieve societal goals, and make sure to deficit spend so as to fulfill the savings desires of the private sector and avoid the paradox of thrift.
Inflation is a core difference: in the current framework, tax increases on the lower and middle classes are seen as necessary to accompany increases in government spending (cf. PAYGO), and central banks raise interest rates to counter inflation by generating higher unemployment. Per MMT, government should instead create space for its spending using targeted taxes and regulation, and issue a job guarantee: pay unemployed people a living wage to do societally useful tasks.
posted by froghopper at 1:13 PM on March 6, 2019 [2 favorites]
John Harvey wrote a great, simple intro to the core of MMT and its perhaps most famous policy proposal, the job guarantee.
posted by froghopper at 1:36 PM on March 6, 2019
posted by froghopper at 1:36 PM on March 6, 2019
Even if MMT is correct one should implement taxes on the rich to pay for social programs anyway because then rich people have less money.
I was reading through some of the kerfuffle around Doug Henwood's anti-MMT article, and this does seem like a point on which people are missing where he's coming from. Somebody accused Henwood of thinking "money grows on rich people" and I thought - no I'm pretty sure he'd say he comes from an old-school Marxist perspective that a rich person has taken something from the rest of us and therefore we should take it back?
Some of the MMT people do give me a sense of a naive, "anti-ideological"/"we can make this work for everyone" worldview. At the same time, though, seeing Henwood go on about "sound finance socialism" and "funny money" is honestly embarrassing. It also provides the amusing spectacle of an argument in which both sides are accusing the other of neoliberalism - Henwood because MMT seems to fall into the spirit of it as I described above, and his opponents because Henwood seems to have decided to stake out a position as a left-wing inflation hawk.
If your argument for why it's necessary to take away rich people's money is that it's a way to limit their excessive influence - which is certainly one of the first I'd come up with - I like Randy Wray's point that nothing about MMT actually makes it harder to do that also, though. After reading through these arguments for a bit it does seem like there's a stylistic level to the debate. The MMT folks seem to want very much to take any element of class war framing out of it, but they sound most reasonable to me when they admit that, yes, actually, it is necessary to limit the power of the very rich and we intend to do so. If one lets go of the idea that the wonk-ism of MMT somehow gets one out of having to take on people in power and win to get one's policies implemented, then one is left with a more technical but also more meaningful debate about which kind of economic policies work.
posted by atoxyl at 2:51 PM on March 6, 2019 [3 favorites]
I was reading through some of the kerfuffle around Doug Henwood's anti-MMT article, and this does seem like a point on which people are missing where he's coming from. Somebody accused Henwood of thinking "money grows on rich people" and I thought - no I'm pretty sure he'd say he comes from an old-school Marxist perspective that a rich person has taken something from the rest of us and therefore we should take it back?
Some of the MMT people do give me a sense of a naive, "anti-ideological"/"we can make this work for everyone" worldview. At the same time, though, seeing Henwood go on about "sound finance socialism" and "funny money" is honestly embarrassing. It also provides the amusing spectacle of an argument in which both sides are accusing the other of neoliberalism - Henwood because MMT seems to fall into the spirit of it as I described above, and his opponents because Henwood seems to have decided to stake out a position as a left-wing inflation hawk.
If your argument for why it's necessary to take away rich people's money is that it's a way to limit their excessive influence - which is certainly one of the first I'd come up with - I like Randy Wray's point that nothing about MMT actually makes it harder to do that also, though. After reading through these arguments for a bit it does seem like there's a stylistic level to the debate. The MMT folks seem to want very much to take any element of class war framing out of it, but they sound most reasonable to me when they admit that, yes, actually, it is necessary to limit the power of the very rich and we intend to do so. If one lets go of the idea that the wonk-ism of MMT somehow gets one out of having to take on people in power and win to get one's policies implemented, then one is left with a more technical but also more meaningful debate about which kind of economic policies work.
posted by atoxyl at 2:51 PM on March 6, 2019 [3 favorites]
The left should just quote Cheney :
You know, Paul, Reagan proved that deficits don't matter. We won the mid-term elections, this is our due.
Which raises a point about Reaganomics, which borrowed a fortune to build a new army and navy, because of a CIA assessment that we would win an arms race with communism and bankrupt the Soviet Union (thereby claiming victory).
Is MMT the Liberal Version of Supply-Side Economics?
An interesting contrast between liberals and conservatives is playing out right now. Conservatives, as you probably recall, faced a problem 40 years ago: their concern over budget deficits always made them the bad guy. Democrats could spend with abandon, but Republicans had to be skinflints—and voters don’t like skinflints.
Then, 40 years ago, Jude Wanniski published The Way the World Works and conservatives rushed to embrace his new gospel of supply-side economics. Tax cuts would supercharge the economy so powerfully that they could banish deficits even if spending went up. It was a free lunch so seductive that it remains conservative dogma to this day.
Today the roles are reversed: liberals have big spending ideas and are tired of having to face deficit constraints that nobody else cares about. This time, the fiscal white knight galloping to the rescue is called Modern Monetary Theory, which says that taxes aren’t really necessary to fund the government. Basically, all government spending is funded by printing money.
There are more details, of course, and so far no liberal version of Jude Wanniski has written a bestselling book about it. Nevertheless, MMT has started to gain a following in the AOC wing of the Democratic Party. It’s become an all-purpose way of supporting things like Medicare for All without having to fuss over taxes or worry about deficits.
So what do liberal economists and pundits have to say about it? So far, they’re not buying it. “I am not a fan of MMT,” says Paul Krugman. It is not just wrong, says Max Sawicky, but “will impress most people as either crankish or arcane.” Matt Brueunig calls it “word games.” Josh Barro says MMT is just circular reasoning: “Whether you take a Keynesian view or an MMT view, if the government spends more, it’s likely going to need to tax more, sooner or later.” Josh Marshall calls it “hokum.”
So far, then, MMT has not seduced most lefty economists into becoming defenders of crank theories the way supply-side economics did on the right. Hooray for us! But it’s still early days, even though MMT itself has been around for a while. What will happen if a Democratic candidate for president decides to become the Reagan of the left, with MMT acting as the gateway to liberal dreams? What will we all be saying then? Especially if the alternative is Donald Trump?
posted by Brian B. at 6:28 PM on March 6, 2019 [2 favorites]
You know, Paul, Reagan proved that deficits don't matter. We won the mid-term elections, this is our due.
Which raises a point about Reaganomics, which borrowed a fortune to build a new army and navy, because of a CIA assessment that we would win an arms race with communism and bankrupt the Soviet Union (thereby claiming victory).
Is MMT the Liberal Version of Supply-Side Economics?
An interesting contrast between liberals and conservatives is playing out right now. Conservatives, as you probably recall, faced a problem 40 years ago: their concern over budget deficits always made them the bad guy. Democrats could spend with abandon, but Republicans had to be skinflints—and voters don’t like skinflints.
Then, 40 years ago, Jude Wanniski published The Way the World Works and conservatives rushed to embrace his new gospel of supply-side economics. Tax cuts would supercharge the economy so powerfully that they could banish deficits even if spending went up. It was a free lunch so seductive that it remains conservative dogma to this day.
Today the roles are reversed: liberals have big spending ideas and are tired of having to face deficit constraints that nobody else cares about. This time, the fiscal white knight galloping to the rescue is called Modern Monetary Theory, which says that taxes aren’t really necessary to fund the government. Basically, all government spending is funded by printing money.
There are more details, of course, and so far no liberal version of Jude Wanniski has written a bestselling book about it. Nevertheless, MMT has started to gain a following in the AOC wing of the Democratic Party. It’s become an all-purpose way of supporting things like Medicare for All without having to fuss over taxes or worry about deficits.
So what do liberal economists and pundits have to say about it? So far, they’re not buying it. “I am not a fan of MMT,” says Paul Krugman. It is not just wrong, says Max Sawicky, but “will impress most people as either crankish or arcane.” Matt Brueunig calls it “word games.” Josh Barro says MMT is just circular reasoning: “Whether you take a Keynesian view or an MMT view, if the government spends more, it’s likely going to need to tax more, sooner or later.” Josh Marshall calls it “hokum.”
So far, then, MMT has not seduced most lefty economists into becoming defenders of crank theories the way supply-side economics did on the right. Hooray for us! But it’s still early days, even though MMT itself has been around for a while. What will happen if a Democratic candidate for president decides to become the Reagan of the left, with MMT acting as the gateway to liberal dreams? What will we all be saying then? Especially if the alternative is Donald Trump?
posted by Brian B. at 6:28 PM on March 6, 2019 [2 favorites]
Mark, I think you're doing government a disservice by only considering the cost impact of its expenditures "reducing your purchasing power". The whole point of having a government is to enact policies that improve people's lives.
I don't know why you think that this was the only aspect I was considering. I am in favor of all sorts of things that would make me and others worse off because I think it is a decent trade in terms of benefits--from infrastructure to education to a stronger safety net. I usually describe it in fairly traditional economic and budgeting terms--which 100% includes being favor of deficit spending when resources are under utilized or in certain other situations.
Rhetorically the people enthusiastically banging the MMT drum seem to really not want to talk about what we're giving up if we want to fund Medicare for All. What I see is essentially a lot of energy on how "fund" is the wrong word and nothing on the question of who we need to tax and how much. (I'm referring to 99% of the online discourse, not most economists.)
I'm also becoming more convinced reading this that MMT isn't some killer rhetorical move for the left; it's a concession. Not sure why, if it were expected, people suddenly think the arguments shits in favor of using deficits to fund a jobs guarantee instead of 0% capital gains tax or something. The battle of what kind of nation we want is going to have to be fought on the merits no matter what, and there's no reason to shy away from it.
posted by mark k at 8:42 PM on March 6, 2019 [1 favorite]
I don't know why you think that this was the only aspect I was considering. I am in favor of all sorts of things that would make me and others worse off because I think it is a decent trade in terms of benefits--from infrastructure to education to a stronger safety net. I usually describe it in fairly traditional economic and budgeting terms--which 100% includes being favor of deficit spending when resources are under utilized or in certain other situations.
Rhetorically the people enthusiastically banging the MMT drum seem to really not want to talk about what we're giving up if we want to fund Medicare for All. What I see is essentially a lot of energy on how "fund" is the wrong word and nothing on the question of who we need to tax and how much. (I'm referring to 99% of the online discourse, not most economists.)
I'm also becoming more convinced reading this that MMT isn't some killer rhetorical move for the left; it's a concession. Not sure why, if it were expected, people suddenly think the arguments shits in favor of using deficits to fund a jobs guarantee instead of 0% capital gains tax or something. The battle of what kind of nation we want is going to have to be fought on the merits no matter what, and there's no reason to shy away from it.
posted by mark k at 8:42 PM on March 6, 2019 [1 favorite]
I'm not sure Kevin Drum's decision to round up quotes from three guys who aren't economists to his two who are is really helping clarify things. The people who are saying that it's kind of an arcane way to reframe things that doesn't end up breaking much new ground in its practical implications certainly aren't entirely out of line with my impression, though.
posted by atoxyl at 9:14 PM on March 6, 2019
posted by atoxyl at 9:14 PM on March 6, 2019
I haven't read deeply on the subject but some part of me feels like MMT is wishful thinking which might lead to downfall while another part of me gets all excited at the idea that we can just DO THE SHIT WE NEED TO DO FOR SOCIETY and it won't mean we go bankrupt and usher in Mad Max reality.
I don't know much about anything related to this, but that's my reaction to these subjects. Is that a useful attitude for a complete layman to have? I'd welcome any input that can provide nuance to my views.
posted by hippybear at 9:20 PM on March 6, 2019
I don't know much about anything related to this, but that's my reaction to these subjects. Is that a useful attitude for a complete layman to have? I'd welcome any input that can provide nuance to my views.
posted by hippybear at 9:20 PM on March 6, 2019
Rhetorically the people enthusiastically banging the MMT drum seem to really not want to talk about what we're giving up if we want to fund Medicare for All. What I see is essentially a lot of energy on how "fund" is the wrong word and nothing on the question of who we need to tax and how much. (I'm referring to 99% of the online discourse, not most economists.)
To fund Medicare for All we already know what you would give up. You would “give up” a hugely profitable private insurance industry. But that’s beside the point. The point is that any suggestion that the US is in danger of going bankrupt because of the debt/deficit are entirely bogus. And that matters, because these arguments have ruled the day for a long time, especially during the Clinton and Obama years.
posted by moorooka at 10:34 PM on March 6, 2019 [1 favorite]
To fund Medicare for All we already know what you would give up. You would “give up” a hugely profitable private insurance industry. But that’s beside the point. The point is that any suggestion that the US is in danger of going bankrupt because of the debt/deficit are entirely bogus. And that matters, because these arguments have ruled the day for a long time, especially during the Clinton and Obama years.
posted by moorooka at 10:34 PM on March 6, 2019 [1 favorite]
I don't know why you think that this was the only aspect I was considering.
I guess I was reacting to the false dichotomy you set up, when the purpose of many government policies is to grow the pie (economy). But I wonder: how much do do you think government expenditures reduce private purchasing power? Is it always a 1-to-1 match, or can it vary? Do you even think it's possible that government investments increase the purchasing power of the private sector?
Rhetorically the people enthusiastically banging the MMT drum seem to really not want to talk about what we're giving up if we want to fund Medicare for All.
The MMT-based take on this policy would focus on real and sectoral concerns. There might be a shortage of doctors and nurses, exacerbated by an initial surge in demand as undertreated patients start using cheap healthcare. The medical insurance industry will lose revenue as people move from private plans to medicare, causing drops in both employment and profits. Better health for the underserved will most likely yield higher productivity, through not being ill themselves, not having to take care of ill dependents, and being less tied to a job because of its medical benefits. Longer-term, healthcare expenditures may drop because of earlier (and thus cheaper) treatment and the government's bargaining power. The money no longer spent on health-insurance premiums will end up somewhere else, which will cause temporary knock-on shortages/business opportunities. Modelling should focus on the risks of demand-pull and wage inflation, with institutional, regulatory, or tax-based offsets: see Mitchell for some concrete ideas.
posted by froghopper at 4:42 AM on March 7, 2019 [2 favorites]
I guess I was reacting to the false dichotomy you set up, when the purpose of many government policies is to grow the pie (economy). But I wonder: how much do do you think government expenditures reduce private purchasing power? Is it always a 1-to-1 match, or can it vary? Do you even think it's possible that government investments increase the purchasing power of the private sector?
Rhetorically the people enthusiastically banging the MMT drum seem to really not want to talk about what we're giving up if we want to fund Medicare for All.
The MMT-based take on this policy would focus on real and sectoral concerns. There might be a shortage of doctors and nurses, exacerbated by an initial surge in demand as undertreated patients start using cheap healthcare. The medical insurance industry will lose revenue as people move from private plans to medicare, causing drops in both employment and profits. Better health for the underserved will most likely yield higher productivity, through not being ill themselves, not having to take care of ill dependents, and being less tied to a job because of its medical benefits. Longer-term, healthcare expenditures may drop because of earlier (and thus cheaper) treatment and the government's bargaining power. The money no longer spent on health-insurance premiums will end up somewhere else, which will cause temporary knock-on shortages/business opportunities. Modelling should focus on the risks of demand-pull and wage inflation, with institutional, regulatory, or tax-based offsets: see Mitchell for some concrete ideas.
posted by froghopper at 4:42 AM on March 7, 2019 [2 favorites]
To fund Medicare for All we already know what you would give up. You would “give up” a hugely profitable private insurance industry.
People already on Medicare are concerned they would give up quality and affordability, which is why most seniors oppose Medicare for all, because they already have it. That's just the beginning of its political problems. Everyone on insurance has similar worries about switching doctors and losing premium services. This is why a hybrid approach makes sense, because those who set out to create a vacuum for care, by ending something that people voluntarily pay for, are going to sink the entire boat. The buzz phrase should be "Medicare for all who want it," as some candidates have carefully worded it. Many prefer to antagonize sure voters in order to get someone in medical need to vote once and only once, rather than solve the problem of affordable care.
posted by Brian B. at 6:43 AM on March 7, 2019
People already on Medicare are concerned they would give up quality and affordability, which is why most seniors oppose Medicare for all, because they already have it. That's just the beginning of its political problems. Everyone on insurance has similar worries about switching doctors and losing premium services. This is why a hybrid approach makes sense, because those who set out to create a vacuum for care, by ending something that people voluntarily pay for, are going to sink the entire boat. The buzz phrase should be "Medicare for all who want it," as some candidates have carefully worded it. Many prefer to antagonize sure voters in order to get someone in medical need to vote once and only once, rather than solve the problem of affordable care.
posted by Brian B. at 6:43 AM on March 7, 2019
That objection has nothing to do with the correctness of MMT. Nor does the "but Reagan did it" objection above.
posted by tobascodagama at 7:34 AM on March 7, 2019
posted by tobascodagama at 7:34 AM on March 7, 2019
MMT and the scope for seigniorage, John Quiggin
posted by the man of twists and turns at 11:13 AM on March 7, 2019 [1 favorite]
posted by the man of twists and turns at 11:13 AM on March 7, 2019 [1 favorite]
There's one piece of phrasing that helped MMT make sense to me: Ezra Klein had a pod with two different economists in conversation, and the MMT one said, paraphrase, "The government spends $100 into the economy and it taxes out $90. That means there's $10 in someone's private pocket. A government deficit is mirrored by a private surplus."
That's definitely similar to what supply side economists say - they talk about money that stays in the private sector doing more better things than money that's taxed. Right?
The "traditional liberal" economist said that you can make traditional economic arguments for financing liberal agendas - MMT just basically isn't necessary. Economic studies already have a good handle on deficit financing and say it's often a good thing.
So I wonder overall if this is all an effort to destabilize people's preconceived notions. Because "everyone knows" how budgets work, and "everyone knows" how debt works, because normal people do in fact get a lot of experience with those things in real life, so "everyone knows" that economists say debt is bad and deficits are bad. In order to break through with the truth (which is, economists often say the opposite) you maybe have to penetrate the popular understanding of how budgets work?
At least, I think that's the ultimate effect of this theory rhetoric, is destabilizing people's prior assumptions to wedge some new ideas in there. Another interesting thing about that pod is that Ezra initially prompted her with, paraphrase, "So the government taxes $100 and spends $110," and she actually switched it in her answer - placing the spend part first. The first framing implies that you have to get money before you spend it (which is how money works for most people.) The second takes government spending as a given.
I think the aim and result of "supply-side" theory was kind of the same thing - destabilizing people's priors and shifting the logical frame. That doesn't necessarily mean these two theories are the same thing, and it doesn't mean either of them are wrong or right. I have no idea. I don't actually understand any of this. It makes sense that it's ringing the same bells, though.
posted by Rainbo Vagrant at 12:16 PM on March 7, 2019 [2 favorites]
That's definitely similar to what supply side economists say - they talk about money that stays in the private sector doing more better things than money that's taxed. Right?
The "traditional liberal" economist said that you can make traditional economic arguments for financing liberal agendas - MMT just basically isn't necessary. Economic studies already have a good handle on deficit financing and say it's often a good thing.
So I wonder overall if this is all an effort to destabilize people's preconceived notions. Because "everyone knows" how budgets work, and "everyone knows" how debt works, because normal people do in fact get a lot of experience with those things in real life, so "everyone knows" that economists say debt is bad and deficits are bad. In order to break through with the truth (which is, economists often say the opposite) you maybe have to penetrate the popular understanding of how budgets work?
At least, I think that's the ultimate effect of this theory rhetoric, is destabilizing people's prior assumptions to wedge some new ideas in there. Another interesting thing about that pod is that Ezra initially prompted her with, paraphrase, "So the government taxes $100 and spends $110," and she actually switched it in her answer - placing the spend part first. The first framing implies that you have to get money before you spend it (which is how money works for most people.) The second takes government spending as a given.
I think the aim and result of "supply-side" theory was kind of the same thing - destabilizing people's priors and shifting the logical frame. That doesn't necessarily mean these two theories are the same thing, and it doesn't mean either of them are wrong or right. I have no idea. I don't actually understand any of this. It makes sense that it's ringing the same bells, though.
posted by Rainbo Vagrant at 12:16 PM on March 7, 2019 [2 favorites]
Matt Levine, Money Stuff
MMTposted by the man of twists and turns at 5:34 PM on March 7, 2019 [3 favorites]
There is a cycle in financial and economics journalism where there is some weird thing that journalists like (journalists like weird things), and so they ask a bunch of famous mainstream finance and economics people about it, and the famous mainstream people are famous and mainstream in part for their ability to have strongly expressed opinions on whatever topic you throw at them, so some of them say “that sounds weird and bad!” and you can write stories like “Famous Person Thinks Weird Thing Is Bad,” and some of them say “that sounds weird, I like it!” and you can write stories like “Famous Person Thinks Weird Thing Shows Promise.” This doesn’t tell you much about the weird thing, but it does tell you something about the temperament of the famous people: Some are cautious and crotchety and hate weird new things; others are starry-eyed optimists or novelty-seeking tinkerers, and love them all.
Here is “Paul McCulley Sees Value in MMT; Larry Fink Calls It ‘Garbage,’” and I think what I am going to do here is not even spell out what “MMT” stands for. If you have come this far you probably know already and have strong feelings about MMT, and if you don’t it will not make your any life better to find out what MMT is and develop strong feelings about it. But in any case it works better just as a string of letters. “Warren Buffett Sees Value in [series of alien glyphs]; Jamie Dimon Calls It ‘Garbage,’” the actual content doesn’t matter, you can do this with any concept. I am not sure you need a concept even; if you asked Paul McCulley and Larry Fink about QNZ, probably one of them would see value and one would say it’s garbage, even though QNZ is just a series of letters I put together here that, dear lord, I hope do not stand for anything. Here’s Bloomberg’s Joe Weisenthal with the most relevant parallel:
The MMT convo really does feel just like 2017 Bitcoin in the sense that every day, someone from the mainstream, who hasn’t spent much time learning about what it is, trashes it.
Before Bitcoin there was a brief glorious moment where the thing was “the platinum coin,” and oh the fun we had. I still have some hope that “should index funds be illegal” will rise to this level of thing. Mostly though I would like us to push into weirder things still. Wouldn’t it be more fun to ask Larry Fink what he thinks about Yamashita’s gold?
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posted by hippybear at 8:32 PM on March 5, 2019 [62 favorites]