I have resigned from those organisations I have been linked with that promote modern monetary theory.
I have done so without regret.
I remain convinced by the core argument of MMT as I see it, as explained here.
I have no time for being told this leads to one inevitable course of action that is the only available option if one wants to be theoretically compliant with the prescriptions of MMT.
I will say in future in response to that claim what I often think when faced with academic nonsense, which is that I live my life in practice and not in theory.
In practice I will continue to argue for the fact that we spend and tax, and that this correct understanding of the fiscal cycle does let us push for full employment. But I recognise that in the real world there are vastly more ways to achieve this than an academic can model. And the real world is where we live.
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Genuinely sorry to see you leave us, Richard.
MMT says that it describes how things actually work In the real world, not how it is claimed to work by mainstream economic theory, so in that sense you have your reason for abandoning the MMT community the wrong way round.
I think it would be wrong of you to base your decision on one aspect or point of theory, as you will never be 100% in agreement with anything. No-one is, unless you are a fanatic believer. I don’t think you fall into that category.
In passing, I also hope you will keep supporting Scottish Independence, which (seen from the Elite bubble) is another fringe movement largely ignored and disparaged by the mainstream media.
However, times are changing, and even in the world of USA politics MMT is gaining ground. Don’t get left behind!
I have not left behind what MMT says
I have left behind the aggression of some who support MMT
And the absurd claims that some who support it make, like it requires leaving the EU and requires a job guarantee, etc
It does not
I am just going to campaign in the real world – and what I would call Modern Fiscal Policy is a part of that
Richard,
You are of course absolutely correct that “MMT” the model of our existing money system does not require us to leave the EU. Some “MMTers”, notably (loudly and aggressively!), Bill Mitchell.
I’ve tried, on Bill’s blog, to point out to him and his Eurosceptic followers that the statement: “EU is incapable of reform and Britain is better off leaving.” is necessarily a prediction about the future which no human being is able to say is certainly the truth because the future is yet to happen.
I’ve tried on this blog to say much the same but for the statement: “EU is capable of reform and, in any case the fallout from leaving outweighs any hypothetical benefits.”
Neither side listen to me. Both are convinced that their predictions about the future are certain to be proved accurate in time.
That’s a faith based position. Almost all predictions about complex systems’ future states are unless they’re couched in terms of probability.
While it may be good for us (essential even?) to have faith in some things for our psychological well-being it’s important to draw a line somewhere so we don’t become too dogmatic about things we actually have no (or very limited) control over. If we become dogmatic we risk being unduly surprised by reality (or worse – blind to it), difficult to work with and unnecessarily emotional.
That said I absolutely understand your desire to distance yourself from the angry and overly certain MMT crowd. I did this autumn 2018 myself. I also quit the Labour Party. I’m having a re-evaluation of what and who is deserving of my faith and I found a great many rather wanting in that department.
You seem an open minded and thoughtful soul and like me I think you probably find the anger and certainty of others rather sickening. Like I’ve often been in the past you seem to be angry in response. That’s something I overwhelmingly understand but have come to realise is destructive and best avoided for my self at least.
Thanks for that
You mean you resigned formally? When? Does this have to do with Bill Mitchell?
I was an adviser to one group
I have quit some others
It has to do with my disquiet about their campaigning
6 years ago few of us would have thought that Post Keynesian perspectives and Neo-Chartalism (as MMT was then known) would have been embraced by the leader of the British Labour Party, have advocates sitting in the US House of Reps (and quite probably the Oval Office within a couple of years) or that it would have become the emerging force in economic thought.
I think that a lot of that success has come despite the dogma and doctrinaire tendencies not because of them, and an impartial analysis might suggest some of it is due to Picketty even though he was not directly involved. In the outside, secular world it might also be fair to say that no one really pays much attention to theoretical disputes among academics – not unless they are very famous and probably not even then.
As someone who is supportive of MMT I ‘ll sum up by paraphrasing Lyndon B. Johnson and say that, for all concerned, it would be much better to have you ‘inside the tent pissing out than outside the tent pissing in’. And I say that with the greatest respect.
Some of it was due to a form known as People’s QE……
As an aside this might interest some readers here. This article features three highlighted quotes in large text. One from Stephanie Kelton, one from Warren Mosler and one from Bill Mitchell. The one from Kelton is clearly dead right. The other two appear to be taken out of context (or so one would imagine).
https://www.realprogressivesusa.com/news/economic-issues/2018-08-30-petrodollar-mmt
Some people are good at emphasis others leave themselves open to misinterpretation. In the end it doesn’t matter whether the economists are consistent or not. Whatever success the theory has the politicians will pick and choose the aspects that suit them, regardless.
It seems to me that some folk conflate a theory about money with a political campaign and then get all the steamed up passion of the convert to shout at anyone that might have a different political policy.
You can fully accept that MMT is how money works and you can, if you wanted, perfectly well use that knowledge to pursue a small state (Thatcherite) policy of downsizing the state, otherwise known as austerity. In fact I have said since 2010 that the whole we need to balance the budget etc stuff was just eyewash to allow the Tories to pursue what they really wanted of getting rid of social security and shrinking the state. For all I know those running the Treasury understand MMT perfectly well.
So I think anyone arguing in favour of MMT as a Theory needs to be very clear as to the distinction between a theory of money on one hand and what policies / political philosophy you advocate on the other.
Agreed. Entirely.
Alastair,
Exactly right.
I’d just add that real democracy is impossible in situations where too many either have a faulty perception of reality or are actively dissembling in their communications.
Ha ha, I meant Timothy not Alastair in my post beginning “exactly right…”
@John “What about changing attitudes from within?” Think you’ll find that’s been tried..
https://www.taxresearch.org.uk/Blog/2019/01/18/why-bill-mitchell-is-simply-wrong-on-modern-monetary-theory-and-imports-and-exports/
@ Timothy Rideout
Agreed. If we are deceived about how money really is created it has the effect of limiting choice and sutting down discussion. Then people can easily be persuaded there is actually no alternative to agreeing to the demands of the bond vigilantes etc,etc. They’ve done a pretty good job on us. The best lies are the ones we believe ourselves.
“For all I know those running the Treasury understand MMT perfectly well.”
Which is why I was keen to try to get an admission:
http://www.taxresearch.org.uk/Blog/2018/07/25/the-treasury-admit-that-tax-does-not-fund-government-spending-as-modern-monetary-theory-suggests/
Peter,
re. this: ” “What about changing attitudes from within?” Think you’ll find that’s been tried..”
But perhaps its not a case of trial and error but a permanent, ongoing pursuit. Being on the outside I wouldn’t know.
Absolutely…agreed Tim.
The underlying problem is this. How do you you test an economic theory?
We have a discipline that produces economists who have no adequate methodology to test their theories with real precision or rigour in the real world. It requires an international financial catastrophe that shakes the whole financial system to its foundations, before an economist notices anything amiss, or even blinks. The professional response then seems to be “nothing to do with me, Guv”; and everyone in the profession dusts themselves down and moves on blissfully, as if nothing has changed. Nothing has changed. The foundations of tenure never shake.
What can you expect of such a discipline? Think of Physics, if there were only theoretical physicists, but no experimental physics. Before someone points out that a social science cannot aspire to the same levels of rigour given the nature of the social science ‘phenomena’; that is no argument to have achieved so little in developing a viable methodology to test evidence rigorously in economics over such a long history of the discipline. Even Adam Smith began with observation. What happened?
Bit of a shame Richard but only in the sense of those groups needing to retain sensible voices not lose them. The bit you were most accurate in was that Bill Mitchell should be kept locked away due to the damage his appalling presentation skills achieves.
As for the infighting and ideological differences, like you I agree with MMT in how it describes money but boy are some bollocks talked about after that. For a variety of reasons I dislike the job guarantee idea and favour a liveable basic income. But I recognise that they are just two of various paths that could be taken. I can see how both could work and also the other options as well.
But to talk UBI gets you thrown out of MMT communities
Richard,
Clearly Bill Mitchell and others have put in a lot of time to considering the details of how a jobs guarantee might work. Understandably they’re pushing that as their main political policy position.
They have reasons to believe UBI to be less good than JG. I tend to agree with but I see no reason why a similar level of effort cannot be put into thinking about how a UBI might work – viewed through an MMT lens. Quite possibly there would be found a good way to implement UBI either by itself or alongside JG. Also it occurs to me UBI may be the sort of thing that becomes increasingly beneficial in the future as greater automation occurs.
Broadly I think the problem “MMT the movement” has is that there are too few professional MMT economists abd too many activists. Consequently the professionals don’t have the time or resources to consider as broad a range of policy ideas as we might like and the activists – due to their inevitably limited understanding of economics – tend to become dogmatic and simplistic and push what they know too hard because it’s ALL they know.
Additionally the usual counter-insurgency activity of the intellectual and political mainstream makes things harder by wasting the professionals’ time but also by tending to make them defensive, paranoid and angry. In that high pressure environment more time is spent pushing ideas that have already been formulated than looking at new ideas or new perspectives on existing ideas.
Also it may be of interest to you…
When I was at one of the UK MMT organising meetings last year (before I got fed up and quit) this became apparent to me:
There was a split within the group over what was the best way to promote an understanding of MMT to the public. In one camp were those who favoured leading on the subject of a Jobs Guarantee. In the other camp were those who favoured a more general MMT education program without any particular emphasis on specific policies.
I was torn at the time but now I think general education program is more optimal exactly because it’s policy and therefore politically neutral.
I think those pushing the Job Guarantee have their hearts in the right place but are perhaps naïve about how soon such drastic changes are likely to become acceptable. I think they’re also not fearful enough of what happens if an I’ll thought out and rushed policy adoption goes wrong or is hijacked by politics opponents.
Much better, in my opinion, to get as many as possible thinking in an MMT style fashion AND then have a bigger and better informed conversation about what policies we actually want.
Agreed wholeheartedly
John S Warren as usual gets to the nub of the problem with economics: too many of it’s theories are untestable empirically. Some of them are like magic. How do you test the magic of “the perfect market”?
IMHO the JG & UBI are deflections from what are really needed – a bit like representative government and FPTP are really just a sop to keep the pitchforks unsharpened. We need policies which deliver full employment for everyone who wants a job and redistribution of income together with caps on income disparities in places of work. We also need social policies to deliver decent (preferably free) health & social services, transport, education, housing, energy…..
There is a compelling article on UBI commented on and linked to here
http://www.progressivepulse.org/economics/universal-basic-income-is-basic-security/comment-page-1
which is costed in tax and spend terms, although the writing Professor in question is actually aware that this is not the way the monetary system works – I’ve checked!
But in doing it the old way he has reassured me and I hope others that UBI does not have to engender permanent high inflation which is what most of its detractors and JG supporters usually suggest.
Richard, PS Personally, I entirely support your decision
Thanks Peter
I can see the attraction of the arguments, but my fear is that it would also be attractive to the right, and turn into “that’s the problem of poverty and inequality sorted, now move on”. Look at the “minimum wage” morphing into Osborne’s “National Living Wage”, stealing the clothes from the “Real Living Wage” movement – and neither versions solve the problem.
MMT is a theory about money. So to that extent it is no different to Nuclear Physics. You can choose to use that theory for good (medicine, nuclear power, etc) or evil (nuclear bombs) as you wish, but all are based on the same theory. There is nothing about MMT that means you have to use it for good i.e. a more egalitarian society with full employment, welfare state etc. You can just as easily use your knowledge to boost the incomes of the top 1% and destroy the welfare state.
So I am sorry but a huge number of folks are entirely falsely assuming that the theory also means some particular political agenda and policy.
It does not!
What you do with your knowledge has to be decided, but of course the current issue is that 95% of the population don’t understand the theory so are open to manipulation by a particular group pursuing a particular agenda. MMT advocates will get themselves banished to the fringes for as long as they continue to conflate Theory and Political Policy.
@ Marco
“re. this: “What about changing attitudes from within?” Think you’ll find that’s been tried..”
But perhaps its not a case of trial and error but a permanent, ongoing pursuit. Being on the outside I wouldn’t know.”
I too, am on the outside.
But it’s not, say, the EU we’re talking about!
The MMT ‘community’ is, I’d suggest, fairly small, so when I posited some problems as a basic supporter, then some MMT advocates called into question pretty much everything else – including, especially, my lack of qualifications. Fine. But it was starting by questioning everything other than my actual query with the way they suggested MMT export/imports worked.
And beware! ongoing pursuit sounds like another area of religious zeal! That is the MMT problem. And there is no point in trying to get a cult to understand or promote something unless you want to become a member of a cult!
I think we should just take the money creation of MMT and not be too concerned with the rest, which may be interesting but far from essential.
I would like just to examine ideas and get the creation of money and its relation to the economy right.
Because, as we know, when we don’t understand it we get ‘deceived’ into all sorts of poor outcomes for everyone except the deceivers!
I agree
Modern Fiscal Policy is fine
MMT takes things way beyond that
” …. we should just take the money creation of MMT and not be too concerned with the rest, which may be interesting but far from essential.”
If there is no adequate method to test a theory rigorously then, unless you are prepared to become an ideologist, all you can do is take the elements that seem to work robustly, and that provide some credible evidence of working i.e., that have usable, practical, demonstrable utility; and dump the rest. It may be short of a ‘hard science’ measure of experimental verification (or falsification for surviving Popperians) but utility had to do for most classical economists for the first century, or two(!) Never cling on to as theory; it is tomorrow’s dustbin liner.
Everything is contingent, and something more illuminating is usually around the next corner. Leave the ideologues (of right and left) in the dust.
Peter,
I’ve been giving some thought to your last reply and to clear the decks the first thing that I would note is that Bill Mitchell, by drawing repeated attention to your ‘lack of qualifications’ (as you put it) has presented not one but two of the classic logical fallacies: argumentum ad hominem and argumentum ad verecundiam. That in itself has fails two of the standards that have been required by every academic that has ever taught me. They all contend that every argument should stand, for better or worse, upon its own merits regardless of who makes it.
I have also been reliably informed that Bill has been posting some regrettable statements in support of a no-deal Brexit (I have not sufficient patience to read them myself). Before passing judgement on that I should note that MMT proponents will understandably have objections to the EU based on the Eurozone being as it is, SGP fiscal rules etc. So a few pro-Brexit positions from their side may be regrettable but not surprising.
To suggest however that the UK should have no treaty with an entity that represents more than half of its total trade as well as all the trade agreements that the UK has with other nations via its membership of the EU, that is another matter entirely. That is intolerable, unnecessary and atrociously bad PR.
This much is understood. There is, however, another way of looking at this. I read Mitchell’s post:
“There is no internal MMT rift on trade or development” ( http://bilbo.economicoutlook.net/blog/?p=41327 ) The quote that Richard lifted from that piece was, admittedly injudicious and wrong on its own terms. I did however find that our objections to that statement were all covered and (eventually) resolved within that blog post.
Now that technique – of making provocative, seemingly unequivocal comments and resolving them elsewhere in the piece – or in another article or chapter. That, be it intentional or not, is a way of getting people to read your stuff more extensively. Its bad communication. You can get away with it to some extent in academia but not in politics. One really bad, unqualified, misunderstood statement in politics can be your complete undoing.
My point moreover is to say that your piece in Progressive Pulse got him to write a reply that addressed your concerns. He didn’t do it all that well. It still had the misleading quote and the ad-hominems but the concerns were addressed, the point was raised and discussed a second time and I imagine (or hope) that he will be more considered in what he writes about imports & exports in future. That’s how progress is usually made in such debates. Incrementally.
I was not satisfied he did resolve them….
But we can differ on that
Thanks for the comment