Latest Productivity Commission report – relies on and exploits our ignorance – to undermine our well-being
I had a sense of déjà vu this week when I read the latest release…
It is Wednesday so just a few things to report and discuss. I have noted in recent weeks an upsurge in the Twitter noise about Modern Monetary Theory (MMT) and various statements along the lines that MMT economists are male chauvinists, mindlessly attack other heterodox economists because we are a religious cult, that we thrive on conflict, that only the US has a sovereign government and more. Quite amazing stuff. And these attacks are coming mostly from the so-called heterodox side of the economics debate although not exclusively. It is quite an interesting exercise to try to understand the motivations that are driving this social media behaviour. Things that would never be said face-to-face are unleashed with regularity these days. There appears to be a sort of self-reinforcing ‘echo chamber’ that this squad operate within and it seems to lead to all sorts of bravado that would be absent in face-to-face communication. None of the attacks seem to have any substance or foundation. They just reflect an insecurity with the way that MMT is creating awareness and challenging progressives to be progressive. And, they just make the Tweeters look stupid. I thought I would document some of the recent trail of nonsense to let you know what is going on in case you haven’t been following it. It is a very interesting sociological phenomena.
I have noticed a cluster of Twitter users who are increasingly adopting what one might construct as being a sort of digital stalking behaviour.
They chime in after one of my blog posts or Op Eds with some inane comment, that is designed to damage Modern Monetary Theory (MMT) and my reputation but always misses the point.
There is a squad of them, all attention seekers, who like Pavlov dogs, jump in with inane reinforcements of an initial insult.
And so it goes.
Their little echo chamber world gives them security to say things on Twitter that they would not have the temerity or the intestinal fortitude to say to my face.
I have met some of them face to face and ‘butter wouldn’t melt’!
I was already subjected to claims that I was “delusional” and “incompetent” when I said I would have voted for Brexit had I been eligible.
But in the last few weeks, after I renewed my analysis of the British Labour Party’s Fiscal Rule and showed it to be unworkable in a deep recession, a new volley of attacks emerged.
Most of these attacks tried to derail the input by claiming I didn’t understand the rule or I had misrepresented it.
They suggested I didn’t understand what a rolling window was – very complex I know – and just kept repeating that claim endlessly, like what happens when an old record player reaches the end of the record and you cannot be bothered getting up to change it.
Although that sound is better than the ‘noise’ that came out these Tweeters.
I think I put those claims to bed in my last blog post – The British Labour Fiscal Credibility rule – some further final comments (October 23, 2018).
While the Tweeters were ranting about rolling windows they conveniently ignored the fixed end-constraint commitment in the Rule that the debt ratio would be lower after the first term of a Labour government.
And as I showed, it would be impossible to achieve that target and not impose austerity in the face of a major decline in non-government spending growth.
They seem to have gone quiet on that front after that.
But the attacks generalised.
As regular readers will know I am interested in the discussion as to why social democratic parties and the ‘Left’ have fallen so far out of favour.
My work over many years has been researching and writing about that theme for obvious reasons.
Without an effective progressive political voice there is little chance of retarding and stopping the damage that this neoliberal era is inflicting on societies.
My 2015 book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale – explored them in the context of the history of European integration.
Our latest book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, 2017) – explores those themes in detail.
Our follow up book (2019) will extend the theme into new areas.
My position on Brexit is informed by that research in addition to my work as one of the first MMT economists.
I find it disappointing that the Left has been trapped by neoliberals into believing that the state is no longer a viable unit in the face of global capital.
I find it disappointing that key institutions and players on the progressive side use neoliberal frames and language, clearly not understanding the research findings from fields such as cognitive linguistics and social psychology that makes it clear that this behaviour only reinforces the neoliberal dominance.
I also find it disappointing that such institutions and players continue to use concepts that are core to mainstream macroeconomic theory (for example, New Keynesian) to argue progressive cases.
They always end up in a tangle about taxes, debt and fail to understand that such a framework emerged from an ideology that is anti-government intervention and blames unemployment on individual sloth and choice.
By embracing a ‘market’ paradigm, progressives always come unstuck.
In that vein, it is a valid academic exercise to examine contributions from writers, think tanks etc who hold out that they are progressive and to indicate where I think they are not helping advance the progressive case.
I don’t hold to the argument that just because someone claims to be ‘heterodox’ or ‘progressive’ that they are above criticism from another ‘progressive’.
If they write nonsense then I think it is a valid exercise to point that out.
If they use neoliberal frames and language then it is a valid exercise to point that out and to draw out the implications of that.
The Tweet Stalking began again last week after I published this blog post – Left-liberals and neoliberals really should not be in the same party (October 25, 2018).
The post discussed several instances of how the progressive side of the macroeconomic debate was shooting itself in the foot in various ways (concepts, framing, language etc).
Soon after I posted the blog, this Tweet popped up:
This character had attacked Thomas Fazi and me over our Brexit and European Union position in the past.
Note the language and accusations.
I was “attacking the good heterodox economists” as if I was committing a sin – being bad.
Let’s consider the Tweet first.
Factually, the section in the blog post that dealt with this issue had nothing to do with the concept of endogenous money.
My blog post considered a research paper published by the Greenwich Political Economy Research Centre (at the University of Greenwich) – Macroeconomic Evidence and Policy Proposals Beyond Unconventional Monetary Policy (June 13, 2018) – which purported to examine the divergences in prosperity among Eurozone Member States.
These are the “good heterodox economists” referred to in the Tweet above.
There was, in fact, no mention of “endogenous” or “endogenous money” in the text of the paper. The paper is not about endogenous money at all.
The paper discussed Quantitative Easing (QE) (asset purchase programs) and list (uncritically) “four transmission channels through which QE could influence the economy” with a footnote to a report from the European Parliament Directorate General, which if you read it is totally mainstream.
The third channel identified was “the bank-lending channel” and the paper notes that:
QE may reactivate economic activity through a bank- lending channel by allowing banks to concede new loans more easily.
The paper then outlines how it will “address” the transmission channels empirically.
The authors write:
… we analyse whether QE-led expansion of the money base has effectively triggered an expansion of lending activity to the real economy. We do this by tracking the evolution of excess reserves held by the credit system as a ratio to the total money base …
Excess reserves are the amount of liquidity available to credit institutions that credit institutions hold idle on their deposit accounts at the ECB beyond regulatory requirements rather than mobilise them through the economy via new loans or asset purchases.
They conclude that:
By the end of 2017, almost 40 percent of ECB-created liquidity was kept idle on credit institutions’ deposit accounts at the ECB itself rather than being fruitfully utilised for the extension of new loans to the real economy. This is an astonishing amount. It goes without saying that this fact considerably diminishes the alleged capability of QE to stimulate the provision of loans to the real economy from the supply side by injecting new money into the economy.
They concluded that “only a limited part of fresh resources injected in peripheral economies via QE were eventually used … to provide loans to domestic firms and households.”
My blog post really traversed these points and noted that:
1. QE is just an asset swap – reserves for bonds.
2. The asset swap drives up prices of the bonds, which lower their yields, and this might stimulate borrowing under some circumstances.
3. Banks do not loan out reserves (except overnight to each other).
4. Loans create deposits and are not reserve constrained.
5. Reserves are added later if necessary.
6. Loans are restricted by the demand from credit-worthy borrowers.
I asked the question: Why is a heterodox economics research unit still publishing stuff that is based on pure mainstream myths about how the banking system works?
So the blog post was nothing to do with endogenous money.
Endogenous money theory tells us that loans create deposits, which then call up the need for reserves.
What the “bank lending channel” the paper was discussing leads to is the causality – reserves create loans.
That is, exactly the opposite of endogenous money theory.
So why would the Tweeter try to make out I was vindictive and stupid by criticising this paper?
Was it a case of him not understanding what endogenous money means or not properly reading the paper I was criticising or both?
Or was it just that he was trying to degrade MMT and my reputation?
All he achieved was making a fool of himself in public.
There was more in this theme (see below) but I want to keep the chronology consistent.
Four minutes later the same Twitter Attention Seeker popped up again with this Tweet:
Again, in the blog post – Left-liberals and neoliberals really should not be in the same party (October 25, 2018) – I had considered the intervention by Theresa May in the House of Commons the day before where she tried to score political points at the expense of Labour by highlighting issues relating to the Fiscal Rule.
The designer of the Rule (Simon Wren-Lewis) took exception to her comments and accused her of lying.
I wrote the following:
Yesterday, in the context of the Tory promise to end austerity, the British Prime Minister verballed him to put pressure on Labour in Parliament …
The reality, if you have read the chapter, is that Wren-Lewis actually wrote that the IFS had said the numbers didn’t add up but if that was to be the case then it didn’t really matter anyway.
The chapter in question, was a contribution Simon Wren-Lewis made to a new book, which contains material about the fiscal rule and was the basis of Theresa May’s statement in Parliament.
Now the Twitter Attention Seeker was claiming that I was just “repeating, once again, @theresa_may’s lie about @sjwrenlewis”.
Wrong. Totally wrong.
I used the term “verballed”.
The Twitter Attention Seeker clearly didn’t understand that I was actually supporting Simon Wren-Lewis’s conclusion that the British Prime Minister was misrepresenting him.
If Mr Michell had taken the time to understand the terminology he would have realised that “verballing” means (Source):
Usually used in a debate, it seems to suggest that someone is twisting or misconstruing someone else’s statement. Of course, it comes from the adjective verbal, but seems to mean something different.
…. The putting of damaging remarks into the mouths of suspects during police interrogation
… misquoted him greatly.
…. To attribute a damaging statement to (an accused or suspected person)
You have to appreciate the context to choose the relevant meaning of the term.
Clearly, Mr Michell was too intent on scoring points against me and whipping up the little Twitter squad to take the time to understand the meaning of the term.
And in doing so, completely missed the point of that section of the blog post, which was not to give Theresa May any validation but to point out that the Fiscal Rule would become a focus of the Tory attack on Labour and that while this first attempt by May was incompetent and crude, they would, over time, refine the attack and give Labour grief.
A few hours later, one of the authors of report previously mentioned (one of those “good heterodox economists”) chimed in with a reaction to Michell’s first Tweet:
The sarcasm (“thanks for the 101 lecture”) just masked the fact that he didn’t understand the point I was making either.
Whether Ben Tippett understands “endogenous money” is beside the point – as above, their paper was not about that and my criticism had nothing to do with that.
In other words, Twitter noise and aggravation for no constructive end.
A little while later on, the person who had called me “delusional” after the Brexit referendum, chimed in with her particular attack on me in this context:
1. My blog post was nothing to do with gender. Since when is it ‘male’ to point out an error in the academic debate?
2. To cast it as a disagreement (“we disagree”) is to then suggest the Tweeter agrees with the mainstream position that reserves are loaned out by banks and are required prior to loans being made.
It was not a disagreement. The Greenwich paper was a wrongful construction of the way modern banking works.
3. And then the insult “a macho sense of superiority”. That is no argument. Just the ‘squawk squad’ in action.
Michell chimed in three minutes later, on song, with a further extension of the insults. You can find the thread if you are interested.
Then the Greenwich guy responded to Pettifor and Michell with this (and the quote is from a Positive Money advocate who had claimed that I am running a “crusade to willfully (sic) misinterpret and misrepresent progressive economists who don’t preach MMT”).
So now the “good heterodox economist” is pushing the MMT is mysogynist line and that MMT “thrives off conflict”.
In fact, the proportion of leading MMT women economists is much higher than the female proportion in the overall economics profession.
And I don’t see my female MMT colleagues holding back when confronted with neoliberal frames and language.
Are they just being male chauvinist pigs?
Their macho insult was interrupted by a beautiful Tweet from Spanish MMT advocate Stuart Medina Miltim:
It was a very nice touch.
“Anglo bigotry” indeed.
The Greenwich guy tweeted a follow up a few minutes later which which ignored the point about bigotry by claiming that the “main issue is a strawman” and that “Econ has a deep problem with male chauvinism”.
Note, earlier his Tweet had said that MMT is “Very male”.
And the point is that the matters I raised were not of the “strawman” variety. They went to the heart of their representation and words and concepts they used in their paper.
I rarely respond to Tweets like this and will never enter an extended conversation on Twitter. But I arrived home later in the evening and read what had been going on during the earlier part of the evening (as above) and wrote this Tweet, and Michell responded as below:
So Michell was trying to play dumb (which is easy given the quality of his social media performance) by saying he “didn’t mention gender”.
Yet he had bought into the accusations from Pettifor and Tippett by retweeting or amplifying their mindless allegations.
Further, what of his question:
… are you saying that ‘endogenous money’ doesn’t concern the relationship between base money (reserves) and bank lending?
The paper I criticised had the causality flowing from reserves to lending which as noted above is not what endogenous money is about.
Endogenous money means that reserves are driven by loan activity.
Michell appears to be oblivious to that critical difference.
And then things calmed down for a while.
Today, I saw some of the anti-MMT ‘squawk squad’ suggesting that MMT is devoid of any notions of power and apparently that I haven’t read any Marx.
I thought the intervention from my MMT colleague Stephanie Kelton was beautiful. It is actually the Retweet from Randeep Ramash, the UK Guardian feature writer who I thoroughly enjoyed meeting in London recently. ‘Owned’ – brilliant one-word response.
The links were to these blog posts:
1. We need to read Karl Marx (August 30, 2011).
2. The roots of MMT do not lie in Keynes (August 25 2015).
The Amazon link was to our book Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, 2017).
And the images she attached were to relevant sections in the index of that book:
To further cement Stephanie’s point here is an excerpt from the Table of Contents of our soon to be published MMT textbook – Macroeconomics:
MMT is firmly ground in aspects of class struggle and many of the insights that Marx developed have found their way into the body of work we can call MMT in one way or another.
The pointless accusations though stirred some nostalgia.
I went to my bookcase and fondly viewed my complete collection of Marx and Engels which have been with me for many decades now.
Here is a photo I took of my original copy of Capital Volume 1.
It is a bit rough around the edges.
And here is the date I purchased it. I had just taken a job as a Tutor at Monash University in 1978 while I completed my first postgraduate studies (Masters at that point). For the first time ever I had a little money and could buy my own copy of Marx’s works rather than having them out on almost perpetual loan from the university libraries.
I imagine that I purchased that book before some of these Twitter heroes were born!
And note the publisher – Progress Publishers – which was the state-run publisher in Moscow that assumed the role of the Foreign Languages Publishing House in 1931.
They made the works of Marx and Engels available to English-readers at very low cost. My complete set of works (Capital, TSV etc) were all selling for $A3 each in the late 1970s.
That was a lot to me at the time but cheap by relative standards.
I understand that their whole inventory was destroyed when the Soviet system collapsed and Progress Publishers ceased to operate.
But my reading of Marx goes back much further than this.
I wrote in this blog post – Don’t let neo-liberal (idiots) loose with a spreadsheet! (August 2, 2016) – that I spent many hours in my youth sifting through all sorts of radical books in the International Bookshop (operated by the now defunct Communist Party of Australia) in Elizabeth Street, Melbourne.
When I was a university student without much cash at all one – great staff member – there used to give me an orange on a regular basis – she always had one available and I guess she knew I haunted the place.
Anyway, the ‘no Marx in MMT’ and ‘Bill hasn’t read any Marx’ is just a further extension of the mindless attacks that are going on via Twitter against our work.
And not long after that, in the same thread as the ‘no Marx in MMT’ claims, there was this incredulous Tweet:
This is another myth that is now being advanced by many British Tweeters who are trying to discredit MMT – that ‘MMT only applies to the US’.
Even John McDonnell’s advisor claimed that.
I covered that claim in detail in these blog posts:
1. MMT is just plain good economics – Part 1 (August 9, 2018).
2. MMT is just plain good economics – Part 2 (August 13, 2018).
3. 2. MMT is just plain good economics – Part 3 (August 14, 2018).
So, lets get it straight – again.
It is certainly a “self-evident” fact that Australia, like all currency-issuing countries that do not borrow in foreign currencies or peg their currencies by any arrangement is sovereign in that currency.
To say otherwise is to misunderstand what currency sovereignty means.
The Australian government:
1. Issues its own currency exclusively. No-one else creates Australian dollar currency.
2. Requires all taxes and related obligations to be extinguished in that currency.
3. Can purchase anything that is for sale in that currency at any time it chooses, without financial constraints. That includes all idle labour.
4. Its central bank sets the interest rate.
5. The currency floats.
6. The Government does not borrow in any currency other than Australian dollars.
Conclusion: more mindless tripe circulating on Twitter from attention seekers who have nothing constructive to offer.
The following text will appear as the Preface in our forthcoming textbook – Macroeconomics – which will be published by Macmillan (Red Globe Press) on March 11, 2019.
The reality is coming closer.
Text starts here:
This book presents a comprehensive, university level study course in Macroeconomics from a Modern Monetary Theory (MMT) perspective.
Our approach is grounded in the operations of real world institutions, and our approach clearly identifies the policymaking capacity of central governments. The pedagogy thus starts by putting the currency-issuing government at the forefront.
We want students to understand how a modern monetary system operates, how the government and non-government sectors interact, how the central bank and the banks interact, how the labour market works, how trade and capital flows impact on economic outcomes and much more.
Students will appreciate what the capacities of a currency-issuing government are and how fiscal and monetary policy can be used purposefully to enhance the well-being of the nation.
Unlike earlier pluralist approaches to macroeconomics where the teaching sequence begins with an exposition of the standard mainstream macroeconomics (dominated by the New Keynesian approach) and then qualifies that conceptual structure and framing with some ‘real world’ criticisms and quibbles, we feel students are better informed if we build the narrative from the ground up based on an understanding of how the monetary system actually operates.
In adopting that approach, we are informed by our view that the mainstream macroeconomic approach does not provide coherent knowledge upon which to understand those real world monetary operations.
We believe that students who are taught in the mainstream tradition are introduced to concepts and explanations of how the monetary system operates which are simply incorrect when applied to the real world.
The consequences of these major flaws of reasoning have, at times, been devastating. Just think about the Global Financial Crisis (GFC). Mainstream economists did not see it coming, and, when the world was on the precipice of a total financial collapse, many advocated government spending cuts to maintain low fiscal deficits. Alternatively, think about the intractable problems within the Eurozone – problems that were identified even before the launch of the euro by MMT economists but which still are beyond the grasp of mainstream economists.
Among other mistakes, the mainstream approach was used to form predictions that quantitative easing would lead to accelerating inflation. That the rising fiscal deficits would push up interest rates and bond yields and that governments would run out of money. Also, that adoption of the euro would allow European nations to converge toward high and sustainable growth rates with rising living standards for everyone.
None of those predictions turned out to be accurate, yet governments that listened to this sort of advice forced millions of workers to lose their jobs and ensured that economic recovery would be a long, drawn-out and painful process.
The literature shows that economists working in the MMT tradition were much more prescient in understanding why the GFC occurred and why it quickly led to an even worse crisis in the Euro area, and what the likely outcomes of the subsequent government interventions would be.
We thus believe that an approach that starts with a sound understanding of how the monetary system works and the capacities of the government as the currency-issuer within it, the hallmark of the MMT approach, provides a sounder platform for students to learn about the economy.
While we present a detailed descriptive understanding of the day-to-day operations of economic institutions (government, central banks, commercial banks, households, firms, trading entities, etc), we are also mindful of the past. To provide students with a contextual perspective, we also introduce them to a rich historical analysis, both in terms of the history of economic thought itself, and the economic history of nations. There is much to learn from history. Many of the current debates that are conducted about policy options are just repeats of debates in yesteryear. More pointedly, some of the resulting propositions were categorically shown to be poor options in the past. We believe that students need to be aware of these issues so as to be better informed of the viable policy options available to government.
We believe the concepts drawn from cognitive sciences such as framing and language are important components in conducting an informed economic narrative and in report writing. In that context, a highly innovative feature of the book is to show students how we use language to frame economic narratives, to convey economic concepts and form policy options. In this way, we place macroeconomics in a broader social science context, which we consider enriches the learning experience for students.
We have not shied away from recognising the benefits of formality – the use of mathematics and statistical techniques. The book provides a solid introduction to more technical aspects of the subject – students will gain knowledge of mathematical techniques, not for their own sake, but because they help us gain a more effective understanding of the material covered.
Further, students will learn how to deal with real world data and apply that knowledge to real world situations. We see that as being essential preparation for students once they enter the professional stage of their lives and are required to prepare meaningful economic commentary.
Macroeconomics is an exciting area of study not the least because it has a profound influence on our everyday lives and the prosperity of our nations.
We want students who use this book to gain a thorough knowledge of the field of macroeconomics in order to equip them with the skills necessary to make sense of the important macroeconomic debates and to be able to constructively participate in those debates.
We hope you enjoy the journey.
William F. Mitchell
L. Randall Wray
Martin J. Watts
One of my favourite artists – Tony Joe White – died last week (October 24, 2018) aged 75.
Here is the Guardian’s (October 28, 2018) – Tony Joe White obituary.
I last saw him play in 2017 in Newcastle. I had seen him play several times before that.
He used an old Fender stratocaster and a Bassman 4 x 10 40 watt amp (1959 version, although he was using a reissued version last time I saw him). But the perfect combination.
He usually just played sitting alone with a drummer in the background.
And then would go crazy on guitar with distortion, wah-wah and other stuff going. It was a really special sound.
I loved his call for requests. People would shout a song from his repertoire and he would do it. One night, he was at the Workers’ Club in Newcastle and we shouted out “Saturday night in Oak Grove Louisiana” and it was obvious he hadn’t expected that request or had played it recently.
And boom – out it came. Beautiful.
Here is TJW with his beautiful song – Rainy Night In Georgia – from a BBC show screened on September 27, 2013.
He wrote the song in 1967 and it first appeared on is 1969 album Continued.
It was covered a lot (initially by Brook Benton).
On the provenance of the song, he told a journalist Ray Shasho in an – Interview – on January 17, 2014 that:
When I got out of high school I went to Marietta, Georgia, I had a sister living there. I went down there to get a job and I was playing guitar too at the house and stuff. I drove a dump truck for the highway department and when it would rain you didn’t have to go to work. You could stay home and play your guitar and hangout all night. So those thoughts came back to me when I moved on to Texas about three months later.
On his motivation to be a musician, he said:
… one day I was about fifteen and my brother brought home an album by Lightnin’ Hopkins. I heard that and boom, turned it around man. I started sneaking my dad’s guitar into my bedroom at night and learned the blues licks.
Appearing with him is pianist Jools Holland as part of his Later … with Jools Holland series run by BBC Two.
On touring Australia, he said:
I always like to go back to Australia especially because the people over there remind me of early Louisiana or Texas days on a Saturday night.
And here is ‘Saturday night in Oak Grove Louisiana’, a town close to where Tony Joe White grew up:
One of the originals of our era.
That is enough for today!
(c) Copyright 2018 William Mitchell. All Rights Reserved.
This Post Has 42 Comments
Presumably all will be quiet on the western front for a while. Paradigm shift is slow, but so is human behavioural change and honest motivation scarce.
I loved all of TJW’s music, but One Hot July was a particularly good, and evocative collection; Fleetwood Cadillac being my favourite.
Vale Tony Joe.
The continued ‘success’ of neoliberalism – and the not unconnected rise of fascism – is an absolute failure of the left. I think part of the problem is that for many supposedly left-wing politicians, neoliberalism has been personally successful – they genuinely don’t see the damage the last 40 years has done to society in general. In the UK it’s incredible how ‘austerity’ economics (if it can be called economics) is the only show in town – the media almost ridicules any other view. Then again, the BBC was hijacked by David Cameron’s henchmen, so has kissed goodbye to any pretention of balanced reporting.
Keep up the good work Bill.
They are clueless that you are trying to put an end to a lot of myths that they hold so dear.
Do not despair, Bill. Maybe the time is just not due yet. I’m willing to bet, that should the tides turn and MMT become self-evidently better than the mainstream neoliberal jibberish, those shrieking the loudest will jump on the bandwagon faster than you can say “hypocrite” and direct their ad-hominems at some newly aquired target. Probably even refering to them as an “outdated macho stuck in his old neo-liberal ways” or something…
The disservice to the fight for equal rights by labeling anything one doesn’t agree with as being “toxic masculinity” is beyond words. I feel like it’s wind in the sails of those reptilian brains that make out the neo-fascist movements around the globe and see “feminazis” all around them. To quote one of those reptiloids: “Sad.”
However, you should feel good about the fact that you had them on the defensive the whole time. They either deflected or put up straw-man arguments (endogenous money), resorted to ad-hominems (you’re a macho!) or moved the goal posts (ok, MMT is not wrong altogether, it just only works for the US). Don’t expect the usual Twitter crowd to crown you, but that is a win in a thinking man’s book.
I’m a big fan of citations, since usually far greater minds have already formulated my fledgeling thoughts in far superior words than I could possibly come up with, so I’ll end with two of them.
On the Twitter “fights”:
“Arguing with an idiot is like playing chess with a pidgeon. It’ll just knock over all the pieces, shit on the board, and strut about like it’s won anyway.” – Anonymous
On fighting the establishment:
“First they ignore you, then they ridicule you, then they fight you, and then you win.” –
Mohandas Karamchand Gandhi
Funny enough, Jo Michell and others engaged in a full thread of projection, virtue signalling, and straw men against me – calling me a sexist and racist. Jo Michell said I was racist because I cited Oswald Mosley’s Birmingham proposals (which he made back when he was a Labour MP) as being in line with MMT. Even if Mosley had made his observation later in his life, when he was the leader of the BUF, that still wouldn’t have invalidated the truth of his economic statements. J. Michell also tried to use a quote from Ernest Untermann I cited in one of my articles (in a larger context and subject) as proof that I was a racist because he claimed Untermann was an ethno-nationalist. If we’re gonna shut down debate because history isn’t rosy as we might like it to be, then we can safely erase/dismiss 99.9% of human history and all its scholars. J. Michell and others blocked me beforehand, while they engaged in this slander. They didn’t have the temerity to actually debate me. They even got the Gower website to take down an article of mine on the Waspi women’s plight (because they had a personal beef with me, not the article’s content).
When someone uses the ID politics card against you, you know they have no substance, no weight behind their arguments. Their attacks against you, Bill, saying you’re obsolete or dogmatic is actually a projection of themselves. Because if they get criticized by a pleb git like me, they immediately tell their followers to block me & if they don’t, they block them in the (pseudo) logic of guilt by association. Personally, I loathe a good number of commentators and figureheads, but I never told my friends or followers to block them or attack them. The level of narcissism required for that I simply do not possess. As for my use of foul language – which I deploy under no organization’s banner – is a tribute to the fictional character of Malcolm Tucker (who most people would agree with, but when they actually get that language, they start turning puritan) and a reaction to all this PC nonsense. The world would be a far better place if people’s incomes and jobs weren’t linked to their opinions. We’d have a much more honest conversation. I prefer honest conflict to dishonest harmony.
To better understand the cultural and social climate we’re in, I urge people to read The Cultural Cold War: The CIA and the World of Arts and Letters by Stonor Saunders.
Wow. What an extraordinary series of attacks. I suspect those people have never made a positive contribution to, well, anything.
I struggle to understand why an economist like Ann Pettifor in her book The Production of Money claims that government spending isn’t ‘funded’ by taxing, but by ‘borrowing’, however taxes are used to ‘balance the books’?
Apparently then all the money comes from rich people. “It’s not rocket science” she says. The title of the book is rather misleading then.
The “very male” comment was a !ow blow, playing the misogyny card. Alhough baseless some of it sticks, like accusations of racialism or anti-Semitism.
Poor show overall. I should have kept the money I spent on the book (money that I got from rich people, obviously) and saved it for the up-coming Macroeconomics book.
“Wow. What an extraordinary series of attacks. I suspect those people have never made a positive contribution to, well, anything”.
Agree 100% – and with special reference to Anne Pettifor, who – like the Bourbons – has evidently “learned nothing and forgotten nothing”. I wonder what imagined slights she believes herself to be (spitefully) reciprocating.
How ridiculous – and how intellectually stultifying – to introduce into a debate about economics the entirely irrelevant issue of gender! An argument either stands on its own merits or it doesn’t – gender has precisely zero relevance.
Frankly it’s just sad to see someone purporting to be a public oracle like Pettifor making an ass of herself by descending to that level.
Was that the Ann Pettifor who sits on the Labor Party economic advisory panel and was involved with the Green New Deal?
MMT is of course just descriptive telling us how the money system works. However, many MMT proponents would like to use that money for ‘true’ progressive ideas like a job guarantee, single payer medical, affordable education, etc.
Talking about these things on twitter usually brings up the question of how to pay for them. The same people who want these things often get turned off by trigger words such as ‘socialism’ and ‘communism’ that are used to disparage such efforts. And of course it is very difficult to portray that deficits well used are extremely productive.
The sad thing is that Congress understands MMT as it uses this knowledge to have no problems in paying for ‘welfare’ for their corporate sponsors including military adventurism.
All right, I know I’m an old fogey but I abominate the “social media” in their entirety and therefore wonder why Bill bothers to engage with that medium at all. For my own part I deeply deplore that it was ever conceived-of, for personal self-aggrandisement by someone who must have had a profoundly cynical view of humanity – a classic self-fulfilling prophecy.
But there’s the rub: the genie once out of the bottle, no power on earth can put it back in again. Or as with Pandora’s box: the harm once done is irreparable and we have to live with the consequences as best we can.
That being so, I suppose Bill’s (and other MMT leaders’) decision not to let the lies, egregious misrepresentations and half-truths proliferate unchallenged but to do battle with their authors on their own turf is the right one – even though it’s a battle that can never be conclusively won, given that the arbiters are the other protagonists. I just wish it didn’t have to be like that. But then, as I said, I’m old-fashioned…
The pity is that not infrequently the *perceived* victor is the person prepared to descend most deeply into the muck (that is to say, resort most readily to ad hominem slurs, straw-manning, dogmatic assertions based either on nothing or on ideology, plain lies, and so on – the kind of thing displayed par excellence in this exchange).
Just as Stephen Hawking, the physicist, once said “you can’t very well argue with a mathematical equation”, you can’t really argue against the facts (or equations) described by MMT; this has to be a very frustrating brick wall for those with a hidden political agenda that could be embarrassed by those very same facts, or to those for whom acknowledging those facts would be personally embarrassing based on nonsense positions they have stated in the past .
In Canada, we have two parties who have claimed to represent both left and progressive positions, the New Democratic Party (NDP) and the Communist Party of Canada.
The NDP were affiliated Internationally with Socialist International until very recently, switching affiliation to the Progressive Alliance this year. The international alliances help to explain why there is so much group think and consistency in political positions globally speaking, and the positions are still sounding very neoliberal after reading the NDP economic platform, which has a heavy emphasis on government creating conditions which attract private investment to finance growth of the economy.
I have good reason to believe NDP leaders understand at least the basic facts of MMT, yet mysteriously never seem to mention this.
The communists while having a clear commitment to full employment at a comfortable level of income, simply don’t seem to have a clue about MMT.
Very helpful summary, and it must have been tiresome to write. One important typo: the text now reads “… had attacked Thomas Fazi and I ..”
That should be “Thomas Fazi and me”
You’re doing a great job. Oh the political hacks that call themselves economists. First they make up lies about you. Then they condemn you for the lies they made up. Your best defense is truth. You’re right to rebut the lies when they appear to come from a credible source. I took heart that people of authority in Britain speak with you and that some of the media are truthful to what you speak.
Yep, we’re definitely in the fighting phase – and they’re losing the argument and they know it. They immediately reach for the ad hominem, the strawman, the outright lie, the exaggeration, the deliberate misinterpretation and worst of all the identity card. They can’t win the arguments anymore, so just throw enough bullshit and hope it sticks.
Disagreement is one thing, failing to be persuaded is one thing, but lying? They’re clearly worried, and so they should be.
I’ve been wrong many many times in my life, sometimes about things that i’d previously considered to be immutable facts. When i was younger i perhaps would have reacted in the way they react, to deny and obfuscate – but as i’ve got older i’ve realised that my ego should never get in the way of learning about how something works. The lack of nuance and the absence of any kind of acknowledgement of uncertainty is surprising even by modern standards. I don’t see any intellectual curiosity on their part – i only see ideological commitment regardless of the evidence. It demonstrates precisely why its called the dismal science.
Bill, I am really sorry that you have to endure this kind of thing.
I call myself a feminist, definitely. But I am ashamed when other so-called feminists throw around the sexist label so indiscriminately. It devalues the word and renders feminism much weaker and feeds the Jordan Peterson style anger at identity politics.
My feeling is that twitter is a malign force in our world and that public intellectuals can never properly put their case in that forum. I am not on it and ignore it completely.
Jon Ronson I think did a very good talk on how Twitter can ruin lives completely – cause suicides – through mass public shaming (or misinterpretation of irony). It really isn’t good for the soul and encourages the worst in us by feeding on our love of schadenfreude.
I don’t think your ordinary Kiwi or Aussie who really needs MMT ideas like the job guarantee pays much attention to Twitter discussions of macro and those are the hearts and minds that need changing most. Not some hubristic self-described heterodox economists.
Keep on fighting Bill. Don’t waste too much energy on this.
I guess you only focus on those keywords such as MMT….I see the same ‘bashing’ if not worse on ALL economists of all shapes, sizes, and schools…from where I sit people in general have the same regard for economists as they do politicians and a lot of it has to do with how much bickering goes on between the different schools.
“First they ignore you, then they laugh at you, then they fight you, then you win”
It puts a spring in my step to be finally at the “fight you” stage. Not long to go now until the paradigm shift is complete. It is moving faster than I ever thought it would 5 years ago.
Over the last 30 odd years it is the loudest I’ve ever heard from the people who made mainstream economics their profession. So we are obviousely on the right path.
It’s such a shame we didn’t hear them over the last 30 years when lives were being destroyed via neoliberal globalisation.
Let’s get down to the nitty gritty here the ones that are attacking you Bill are remainers. This is mainly about the Brexit debate with a couple of side shows thrown in.
Ask any of these people who are attacking you how they plan to reform the EU if the UK remained and they would all look back at you like Homer Simpson. They are clueless.
There is not one person from that list who knows how to reform the EU that won’t be laughed out of town by EU members. These people have been trying all of their carears to come up with ways to reform the EU and the grand total of their success = 0.
It’s more akin to lets stay and cross our fingers the EU reforms itself based on wishful thinking and EU funding that they get. I bet they’ve produced 36 DSGE models that shows how a giraffe can hang upside down from a tree by the tail that can sing in Manadarin to reform the EU.
They don’t want to leave
They have no idea what to do if we stay
It shows as the attacks reek of desperation.
Ask them, ask any of them they have no idea how to change anything within the EU that will be accepted. They did manage to get smoking banned in pubs though so lets not be too harsh.
” How are you going to reform the EU and take it back from neoliberal globalisation ” would be an excellent twitter question for any of them.
It would be like 30 years ago and you would hear a pin drop.
They all know how to make the EU more neoliberal and more globalist.
They’ve built their carears on it and why they get asked onto TV.
In Michael Hudson’s latest blog post “Banking Deep Dive” (audio) he calls the EU a fascist state set-up by Austrians (school) as class warfare. Worth listening to.
Derek Henry says:
“Let’s get down to the nitty gritty here the ones that are attacking you Bill are remainers. This is mainly about the Brexit debate with a couple of side shows thrown in”.
That’s a fascinating connection you make, not one that would have occurred to me. Now you come to mention it, yes, it all fits. The same bile, the same pig-headed obstinacy, the same delusions, the same myopia, the same odious self-satisfaction with their own righteousness combined with vilification of anyone daring to question it, the same stereotyping of opponents as by definition racists, fascists, male chauvinists or any other “-ist” epithet that comes to hand in their mental junk-yard of time-worn cliches, the same resorting to slurs and innuendo, the same constant mindless barracking to drown-out any other sound but that of their own opinions being echoed back to them.
What a depressing spectacle. If this represents what now passes for intelligent debate in Britain I despair for her future.
And as a Leaver I don’t blame any of that on the EU:- this is self-harm.
If your plan is so complex that a full professor consistently misrepresent it, how in the world can citizens of UK vote for you confidently and be able to defend your fiscal plan against fellow citizens’ ideas?
Their fiscal rule is asinine. What happens if government runs a much needed net investment into the economy? Then it is a good thing! What the heck are you even arguing about?
At this point, i think its a learned ignorance of mainstream economists that is the problem. I think Jeff L is right. Their ego stand in the way of knowledge.
MMT makes sense to me intuitively. I don’t have to do any convoluted thinking at all.
In a way though, you feel sad for them. To spend so much time on garbage. To them, it may not be possible to accept MMT because it hurts so much.
Anyway, I hope they are on board with taxing the wealthy so society is more equitable rather than the spewing John bates clark bs.
I will remember that question to ask the left, Derek. Characters like Bolsonaro and Trump come to power because of a useless left. People need to hold their feet to the fire.
Regarding the points made above by Derek Henry and robertH, the attitude of Jo Michell and many like him is encapsulated in his tweet of 10 October 2018:
It would be hard to find a better example of confirmation bias.
It seems that Michell is unwilling to read the works of Goodhart, Goodwin and Glasman and is unable or unwilling to form his own opinion about their analyses of the EU Referendum. Of course, these are analyses which contradict the standard ‘Left’ narrative that more than half the UK electorate must be a racist dimwits from the North.
It may be that Goodhart, Goodwin and Glasman have got it wrong (I think Goodhart may be on to something with the notion of Somewheres and Anywheres), but at least they are trying do something about the deep divisions in this country. At least they recognise the absurdity of the standard narrative. At least they are willing to start a discussion.
Michell’s attitude, on the other hand, is an example of the tribalism and group think which infects much of UK politics (and economics). Too many of us are unable to countenance ideas or concepts which originate from outside our political silos, no matter how useful or illustrative they may be.
It’s clear that Michell has no desire to heal the divisions in our society and merely seeks out help from the in-group so that he can perpetuate them.
The crowd that has been attacking you (and MMT in general) have been at it for years, Bill. That Frances Coppola, a legend in her own mind (one day, a poor, persecuted starving nobody another day), has been gigantically mis-representing the meaning of “monetary sovereignty” for a very long time, whilst presenting herself as an expert on MMT.
That Ann Pettifor is beyond redemption, as well. She’s completely useless as a macroeconomist, and her self-proclaimed feminism is of such a boring, ‘liberal’ (in the American sense), almost anachronistic variety that my womynist fellow Wesleyan University student in the mid-to-late 1980s would outright laugh in her face.
The worst part of it all is that these people are treated as “allies” by some in the broad MMT community. They are wolves in sheep’s clothing. Nothing worse than a faux-ally.
A few years ago Ann Pettifor and the Postive Money group were on the up in the UK.
Then Bill (amongst others) criticised the Positive Money ideas.
Since then it’s been a regular trading of criticisms – and unfortunately insults – back and forth.
There’s name-calling going in all directions and it doesn’t persuade the public to listen to academics or to heed research findings.
A lot of the academics who appear on television and the web are campaigning, not merely attempting to educate. Therein lies the rub.
The UK doesn’t have a co-founder of MMT – correct me if I’m wrong but I think all the co-founders are from the USA and Australia – so Positive Money et al lost something when Bill acquired a sizeable UK-based audience.
The USA MMT co-founders and experts for understandable reasons don’t focus so much on the UK, and I’m extremelly grateful to Bill that he posts so much about the UK’s economy. Without Bill’s posts, I really do fear for where my understanding would be of my own country’s economic policies.
I’m glad to say the arguments are much more genteel on Quora. I regularly respond to the ignorance exposed there without getting verballed for it. I’m glad I avoid Twitter entirely.
Sad to see Ann Pettifor joining the anti-MMT Tweet brigade, I thought she had better sense than to behave like that. I have been following and supporting her work hoping she would be see more value in MMT as it gained widespread appeal among heterodox economists and the public. However my hopes have been dashed, I am now aware she is a long-term fan of Positive Money from her NEF days and sees MMT as a rival policy option to be thwarted.
Its obvious to me now that Positive Money,The American Monetary Institute and some Post-Keynesians are extremely jealous of the widespread and growing success of MMT. They have lost intellectual and public ground in the on-going debates with MMTers and its sour grapes if you ask me.
I had been following Ann for a while, but was getting increasingly annoyed with a lot of Brexit nonsense she had been tweeting and retweeting, and all this was the final straw. Now unfollowed.
It’s probably best to mostly ignore these people… Not much of their tweeting will escape their echo chamber anyway.
One person I really wish you would sort out your differences with is Steve Keen. I only found out about MMT and stumbled across this blog after reading his stuff. He’s doing some interesting stuff and has a pretty high profile, and his views are so close to MMT that it would be hugely beneficial to MMT and heterodox economics in general if both could reach a consensus about the foreign sector!
Derek, kindly refrain from introducing irrelevancies into the discussion. Brexit has nothing substantial to do with many objections to MMT. This is a red herring. It is the substantive critique that matters and must be addressed, not ad hominem issues.
J Christensen, Hawking was wrong when he contended that one can’t argue with mathematical equations. Such equations are no more than symbolic representations of corresponding linguistic statements. Each math equation has a corresponding linguistic representation. Take a + b = b + a, the commutative law of algebra. While the math expression is quite simple, its natural language equivalent is rather baroque.
Now, math statements are generally of two forms, definitions and substantive statements. MMT has both. There is a further complication. MMT borrows equations from another field. There is nothing wrong with this; it just complicates the logical relationships in a theory — what logical status do borrowed equations have. They have what the theory says they have.
So, I can ‘argue’ with both mathematically formulated definitions and substantive assertions. I can argue that a given definition is useless or the like, and I can argue that a given substantive assertion is false, that is, not true as the theory asserts.
Dream on Larry
That’s how it all started.
The Jacobin article.
Derek, objections to MMT predate any Jacobin article. Dream on yourself.
I think you need a female voice here. Bill, do you know that Patricia is being attacked quite viciously. I told her to be proud. I know I would be – a bit jealous now.
Carol, I don’t know who Patricia is but I don’t need to know to know that what is happening to her is quite objectionable. Revolting.
@Larry: see https://www.reknr.com/
Oh what a shame, a lot of this exasperation is superfluous.
MMT might be the most beautiful, sophisticated logic in economic history, its dynamic forces so irresistible. That does not stop it being questioned and resisted in what is tantamount to a battle of principles; those beliefs moreover, tend to be expressed within an ideological context, some of which often cannot be quantifiably measured.
It is one of humanity’s basic and relentless burdens that it seeks out and recognizes conflict, even if it is figment; some aspect that does not square with our emotions, our beliefs, our objectives.
These unresolved struggles lie outside any theory and therefore cannot be resolved by emphasizing its righteousness.
Even if MMT is adopted by a country overwhelmingly supportive of its principles, there will therefore arise struggles that endanger its deployment, and its success.
The attacks on Bill seem to me a case of not very good economists seeking to throw up a smoke-screen about their intellectual inadequacy by bad-mouthing him. The last thing they seem capable of is actually coming up with reasoned rebuttals to Bill’s criticisms. These men and women unfortunately will become history’s cobwebs when they could have made solid contributions instead of focussing on their inflated sense of importance!
Regarding Francis Coppolas comment about the US and monetary sovereignty , what are her reasons behind that comment? What are her reasons for stating that Australia is not monetary sovereign because of exports? I am only asking because there must be some reasons for this. Obviously Australia can not defend itself militarily, doesnt produce its own fuel, etc etc , its a very vulnerable country. So I wonder what is her reasoning behind that comment?
title of post “twitter echo chamber”
twitter was set up to divert any thinking person from the real issue. [Framing]
Vitriol in 280 characters.
In a larger context as the validity of MMT gain wider appreciation and policy traction these alliances of critics will only get worse, the critiques more repetitive, dumber and will try to bring in gender and other issues to attack MMT.
It mirrors the positional inconsistency of the old late 90’s early 2000’s climate denialists.
Where you would have an alliance of the following groups:
1. ‘climate change does not exist’ and then 2. ‘climate change exists but its not man made’ and then suddenly 3.’climate change exists and its man made but too small compared to say the sun’ and a small dose of this group 4.’climate change will be good’ all denialists and fake experts.
Anyway each groups position is clearly not consistent with the other but they’ll all band together ignoring this fact to attack the real science going on anyway.
Bill has illustrated another example of why I cant stand twitter, its a dense social network. Albeit a medium which is information poor (instead of rich) but is certainly time demanding like reading something information/data rich.
I’d rather spend that limited time learning slowly and adapting my own progressive views from places like Eric Tymoigne’s banking book or that fellow we call Marx. 😉
This is my understanding of Bill Mitchell’s critique of Positive Money.
The problems with the financial sector have nothing to do with the capacity of banks to issue loans that are backed by the income stream that is expected to be generated by the asset that the borrower is using the credit to buy. That is a core function of a bank. The other core function of a bank is to facilitate the payments system. That’s it. Nothing else.
The problems were caused by permitting banks to do a lot of non-bank activities such as:
trade in credit default insurance
keep some of their assets off their balance sheets
trade in speculative financial assets that serve no productive purpose
engage in third-party commission deals and play a brokering role in financial transactions
Positive Money proposals don’t change the fact that ultimately the central bank needs to provide sufficient high-powered money to keep the payments system functioning. So there is a “smoke and mirrors” aspect to PM proposals.
Positive Money proposals involve the undemocratic idea of a Money Creation Committee that would be separate from parliament and unaccountable to voters. This kind of committee would reflect the ideological biases of elites (the current bias is towards austerity and using unemployment for inflation control). Voters would not be able to replace the MCC when it made mistakes.
I learned these points by reading these two blog posts:
I think a lot of that crowd fancied themselves as some progressive vanguard, and are piqued at how MMT has caught on.
I think Gogs is talking a whole ton of bollocks