So MM-MMT Debate is Definitional and Political

     This is what an astute commentator at had suggested and I've come to more and more see that as having merit.

http://diaryofarepublicanhater.blogspot.com/2012/04/mm-vs-krugman-vs-mmt-political-and.html

     So, for example, the real point of the debate between MMers-who say it's all about monetary policy fiscal policy is out of order-and MMTers-who want us to return to a fiscal focus is political. Really the definitions themselves have deep political implications.

    This is no more clear than listening to a long time Money Illusion commentator Morgan Warstler who always tells me that Sumner is pulling of the Trojan Horse job of all time that basically he will achieve a deeply Right wing economic agenda. This comment he left on my blog lately is typical:

    "Standing very close to Austrians is MM, NGDP is a cap on growth, booms will be pissed on religiously, gvt driven booms will be nuked in the the crib, RGDP is preferable over inflation, and real productivity will be favored over fake RGDP like paying public employees more - and since we do all that IF, and ONLY if we ever enter a crisis, we'll print some money - and no human will be in control of this."

    http://diaryofarepublicanhater.blogspot.com/2012/04/mmt-mm-smackdown-scott-sumner-vs-dan.html

    I think Morgan speaks the truth, and I respect him for not trying to BS anyone. What I like to say about him is that while your typical conservative will pee on your leg and tell you it's raining, Morgan tells you point blank he's peeing on your leg. If anything though, Warstler is always trying to convince Scott that he is going about it wrong-rather than try to win over wet liberals like me he should be talking directly to the tea party. In this I think Morgan is wrong. If Scott did he'd be much easier to dismiss. His ability to co-opt is a product that he is user friendly for many liberals who read his blog as well-it's not just for Righties. If it were just like reading RedStateAmerica it would have much less effect.

    As to this question of definitional issues having political effect, consider this recent piece by Sumner.

    http://www.themoneyillusion.com/?p=13877

    "Lots of people aren’t happy with Federal Reserve policy, which has led to a call for use of fiscal stimulus. Of course ad hoc policies don’t work, if we are serious about fiscal stabilization policy, we need a coherent rule, not a set of sporadic actions. Even Keynesians like Eggertsson and Woodford have now accepted the rational expectations view that it’s the future expected path of fiscal stimulus that matters, not spending this month. So how much coherence could we expect from Congress in the area of stabilization policy?"

    Note the appealing concern trolling I often mention in connection with Sumner-"even Keynesians like Eggertsson and Woodford" have accepted the rational expectations view. He seems to be saying we-both Monetarists and Keynesians-again this appeal to a larger audience than the conservatives Warstler would be happy for him to concentrate on-are in this together. We're all frustrated by the failures of the Fed. But even worse would be-Congress.

    To a rough approximation, who can argue? Congress is horrendous. As I said to Dan Kervick the other day and he agreed, whatever you think about the fixation with monetary policy, it is due the absolute failure of Congress to get anything done, especially since the election of the Tea Party Congress in 2010.

   Of course on the other hand, that the fact that "even" Keynesians like Eggertsson and Woodford agree about rational expectations and fiscal policy only being beneficial from an expectations channel stand point is precisely why MMTers like Keen are so negative about the New Keynesians-they accept so much of the Neoclassical dross.

    Sumner argues that Congress is not to be trusted on "coherence" in the area of "stabilization policy." Why is that? The reason Sumner gives this time-he's got a million of them though-is that Congress committed the sin of raising the minimum wage. Yes had that not done we might be done by now with the downturn don't you know? Here is Sumner:

   "Start with a few facts:

    1. Congress raised the minimum wage by roughly 40% between 2006 and 2009. How’s that working out for youth employment?

   2. The past 3 1/2 years saw the slowest NGDP growth since Herbert Hoover was president."

   I thought that Sumner in the past has warned against assuming causality from correlation? He goes on to decry that some want a higher minimum wage than even the extravagant current $7.25 minimum wage.

   "Looks like it wasn’t exactly the best time for a huge rise in the minimum wage, doesn’t it? Not according to this New York Times story, indeed the 40% increase was far too small, it should have been closer to 100%:

As the nation’s economy slowly recovers and income inequality emerges as a crucial issue in the presidential campaign, lawmakers are facing growing pressure to raise the minimum wage, which was last increased at the federal level to $7.25 an hour in July 2009.
State legislators in New York, New Jersey, Connecticut, Illinois and elsewhere are pushing to raise the minimum wage above the federal level in their own states, arguing that $7.25 an hour is too meager for anyone to live on.
Massachusetts lawmakers are pushing for a big jump, with the Legislature’s joint committee on labor approving a measure last month
Voters in Missouri may be asked to vote on a minimum wage referendum in November.
These moves are giving momentum to an effort to persuade Congress to embrace a higher national minimum wage. Some liberal and labor groups, capitalizing on the energy and message of the Occupy Wall Street movement, are urging Senator Tom Harkin, Democrat of Iowa and chairman of the Senate Labor Committee, to head a Congressional effort to raise the federal minimum to $9.80 an hour by 2014."

       The idea that $7.25 really is too low for anyone to live in is just beyond the ability of a Scott Sumner to wrap is mind around. He can't imagine that anyone can't make ends meet on that. He once argued to me that he could do it tomorrow on $7.25 and hour that "he's been poor at different times in his life" and "even when I was poor I had savings."

      Sure, but if you have savings are you poor? I know Warren Buffett can live off of $7.25 for the rest of his life. Does it make any sense to lecture a homeless guy that he should do the same?

      Just to punctuate this political point Sumner finishes with a flourish:

       "For those Republicans who bemoaned Chris Christie’s decision not to run for President, consider this chilling report:

In New Jersey, the Senate and Assembly leaders, both Democrats, support raising the state minimum to $8.50 an hour from $7.25, and Gov. Chris Christie has urged them to sit down with him to discuss the issue.

        "I would have felt a bit better if he’d just said “Hell no!”

         Yes the idea of poor people making a whole $8.50 is pretty chilling. And I believe it. I'm sure the idea of this is much scarier for a Scott Sumner than for example the news that Charles Manson is on the loose.