Tom is always amassing all this evidence that the MMers and MMTers and others are all going to suddenly see how much they have in common and realize that they're on the same side. I was amused to see this quote from Sumner that Tom pointed out to me.
"Ralph, You said;
“Of more importance is the fact that there’s not a huge difference between market monetarists and MMTers.”
"Both Hitler and Gandhi were vegetarians, I guess there must not have been a big difference between them."
"I guess he's not prepared to go there just quite yet. :D"
http://www.themoneyillusion.com/?p=26371#comment-323857
"Ralph, You said;
"Both Hitler and Gandhi were vegetarians, I guess there must not have been a big difference between them."
"I guess he's not prepared to go there just quite yet. :D"
http://www.themoneyillusion.com/?p=26371#comment-323857
He's never going to be willing to go there. Sumner understands no matter how much Tom or Ralph Musgrave or anyone else wants to believe that Scott is about to sing 'We are the World' that this is a war he's fighting and that's never going to happen. His goal as he's made clear so many times is to 'drive a stake through the heart of Keynesianism.' I don't think that's a joke either.
I get why Tom finds this hard to believe-he's Switzerland., which it's true didn't do so bad during WWII either. Still, in all seriousness why does Sumner look at MMT as Hitler? Can someone who sees those he disagrees with in these terms really be so benign? I don't think so. He's got a clear agenda.
What exactly do MM and MMT really have in common? MMT in some ways is what you might call 'hyper Keynesianism' or Keynesianism taking to it's furthest limit, it calls for a permanent job guarantee by the government even during booms-.MM is simply old wine in new bottles-it's just a revamping of Friedman's Monetarism. So MM is just a rather radical version of Keynesianism-really its Post Keynesianism-and MM is something similar for Monetarism. Only if you think that Monetarism and Keynesianism are natural friends would you make the mistake that Musgrave made here.
I see that it falls to me to see Sumner for what he is. LOL. Still reading Ralph's full comment I see it's overkill to say that he's 'kissing Sumner's ass.' So when I read this quote my reaction was it bodes ill if even alleged MMT sympathizers like Musgrave are trying to suck up to Scott. However, in reading Ralph's full comment I see this is not happening:
"I don’t attach much importance to the fact that Scott managed to find two errors in a very long and boring article written by an MMTer. Of more importance is the fact that there’s not a huge difference between market monetarists and MMTers. Market monetarists say that in a recession, government / central bank should print money and buy assets. MMTers say they should print money and spend on a wider variety of stuff (and/or cut taxes)."
"Since the former policy is inherently distortionary because the money is channeled into the pockets of a narrow section of the population, the asset rich, I favor the latter policy – the MMT one."
http://www.themoneyillusion.com/?p=26371#comments
Yes, it does seem on that level there isn't that much difference and this is what probably wins over a number of liberals and centrists for Sumner. It seems like we're on the same side just like it seemed that Keynesians and Monetarists were on the same side during Friedman's day. Yet they aren't. Monetarism is a political project-not 'just about economics.' I've made this point before that contrary to what Sumner and other MMers say, economics is not wholly innocent of politics-far from it. To the extent that any of it is relevant to policy decisions how can it not be political? Monetarism is just a very inventive way to cut government and convince us that even in a bad recession we should practice Moynihan's 'benign neglect.'
So on this one I agree with Scott. There really is a lot at stake. Saying this however,there are developments that don't bode so well for him-like the truth of the balance sheet recession concept-even Scott no longer tries to flat out deny it
http://diaryofarepublicanhater.blogspot.com/2014/03/scott-sumner-im-no-expert-on-financial.html
Saxie,
ReplyDeleteGI/CYB is the TRUE Keynes play. Period. The end. And you ought to be figuring this stuff out on your own.
"Market monetarists say that in a recession, government / central bank should print money and buy assets. MMTers say they should print money and spend on a wider variety of stuff (and/or cut taxes)"
This is pretty convoluted, it's not correct, but that's not the topic. So please blank your mind of it for a second.
"Animal Spirits" is the topic. It's pure Keynes.
Go read #9 here:
http://www.rogerfarmer.com/NewWeb/JournalArticles/ANIMAL%20SPIRITS.pdf
"Much recent business cycle research assumes that business cycles are driven by
technology shocks but we do not have a very good explanation of what these shocks
represent. The BFG model represents a plausible alternative to the real business cycle model. It recaptures an idea that is at least as old as Henry Thornton (1802), and recasts it in modern language.
Why should we care if shocks arise in the productivity of the technology or in the minds of entrepreneurs? The answer is connected to the efficiency question. If business cycles arise as the consequence of the optimal allocation of resources in the face of unavoidable fluctuations in the technology, then there is not much that government can or should do about them. But if they arise as the consequence of avoidable fluctuations in the animal spirits of investors then the fluctuations that result are avoidable and the allocations are Pareto suboptimal."
Look man, the problem is MINIMUM WAGE.
Saxie, we spend $750B on welfare.
Even though you disagree, YES it is GOOD we have welfare.
See you want people to earn enough, none of them need welfare.
If that's not possible, you want them to have welfare, or a guaranteed income or some thing that is a SOCIAL COMMITMENT.
But that's not enough Saxie. Just saying a social commitment doesn't get down to brass tacks, WHAT is "fair"? We have to know.
A two bedroom apartment, broadband, A/C, heat, hot water, food, health care - ok yes now we get somewhere.
The PROBLEM Saxie is you can't or won't admit outloud and stick to it that:
Many people cannot earn enough with their market based skills to buy these things in a market based market priced system.
Many people can't cover their own nut.
That is the "state of nature"
So we use wealth transfers to make sure everyone has these things.
This is NOT Keynesian.
Keynes didn't make out that list of things and say government should "create demand" until everyone has these things.
Keynes said we should use government to create demand for people's labor.
And he said we SHOULD do it in a way to our animal spirits high.
We are facing massive technology shocks.
The worst possible thing is to have NEGATIVE ANIMAL SPIRIT SHOCKS at the same time.
GI/CYB is the only progressive positive animal spirit shock Keynesians have to play!
Do you really want to do Keynesian tax cuts for job creators? No you don't.
Saxie, MMT is not 'hyper Keynesianism' - because Keynes would take one look at my version of a job guarantee vs. MMT and 100% of the time he'd choose mine.
He's say GI/CYB is best possible way for government spending money to get animal spirits moving in the poorest areas. He'd LOVE IT.
I've synthesized a compromise between the opposing camps of Econ.
But there are some political folks who don't want unemployment - it keeps them from growing government.
Noodle this stuff Saxie, think deeply.
But there are some political folks who don't want to END unemployment
ReplyDeleteWow, I'm back in the spotlight again... I'm make sure I'm not being defamed too badly in a minute :D
ReplyDelete... but for now a quick O/T for you from Nick Rowe:
"The trouble with Keynesians is........they assume rational expectations and full information. Without even realising it."
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/03/two-lm-curves.htmlj
I asked "isn't this true of monetarists too?" (I actually don't know, but I thought it was), while JW Mason opens a modest defense of Keynesians right after.
Really only the last sentence caught my eye, so now I need to go back and really read it. I *think* it arose out of this recent discussions in the thread with HJC in the previous post regarding what Steve Keen was trying to do. I thought I smelled a bit of PKE in those comments (makes sense as they started off discussing Keen anyway), so that makes me especially curious to digest this new one from Rowe...
Ha! I was going to largely agree that the major differences between MMT and MM are political, and use Warstler as the best, most self-aware, example. But I see he beat me to it.
ReplyDeleteBut Morgan, I don't recall Keynes actually supporting anything like a GI, but he did explicitly endorse public works. In the quote below, he seems to be closer to MMT than to you (assuming GI would count as "relief expenditure"):
"public works even of doubtful utility may pay for themselves over and over again at a time of severe unemployment, if only from the diminished cost of relief expenditure." GT Book 3, chapter 10, Section 5, p. 127
http://reflectivequilibrium.blogspot.com/
Jared,
ReplyDeleteThe was NO INTERNET when Keynes was alive.
Gents, Friedman was smart guy, Keynes was smart guy, Hayek was smart guy. ANY smart guy who runs into the Internet - is going to CHANGE SOME BASIC ASSUMPTIONS about search and matching and sticky wages and host of other things.
Friedman saw the Internet, and he made some big new claims.
Jared (and Saxie don't be afraid),
You really need to read Roger Farmer before you talk about Keynesian Econ.
He's an eye opener.
What guys like DeKrugman and Noah are trying to prop up as Keynesian is not Keynes.
Look, Im not talking about the simple Keynes of "don't grow government during good times"
I'm talking about the deeper point, that Keynes totally groks that consumers, and investors, and workers, and generally society can have an "BOORAH!" attitude and they can have a "OH SHIT!" attitude.
And government's job is to deliver that BOORAH.
So would Keynes's put up with doubtful utility public works IF HE HAD TO?
Sure.
But would he PREFER seeing everyone in the ghetto who becomes a free market hustler making use of amazing Internet search matching tech, also gets a wage subsidy?
Yes.
And people today who don't prefer that, are not Keynesian.
"Still, in all seriousness why does Sumner look at MMT as Hitler?"
ReplyDeleteWho says he sees MMT as Hitler? Do you really think Sumner sees himself as Gandhi? Lol... a joke! Just a joke. Actuallly, I read it as a comically extreme example to point out an absurdity and nothing more. I really don't think he sees either side as Hitler. But then again... :D
"What exactly do MM and MMT really have in common?" ... that's an easy one Mike: two Ms. But seriously, Cullen has compared MMT with MM too. As have a number of sympathetic commentators on his blog... but you'll ether have to take my word for it, or ask Cullen yourself because I don't care enough to try and find the quotes. The overlap, according to Cullen (if I recall his view correctly), is in their similar view that the central bank and/or gov has so much power over the markets. I think he calls both "government centric" or some such. Personally I see more differences than similarities, but I'm no MMT expert: I'm not a regular on NEP or similar.
Nick Rowe has gotten a bit of a Steve Keen bug recently BTW. Check out the comments in his "supply-determined" post. He's had it before actually, as Andrew Lainton points out here:
http://uneasymoney.com/2014/03/13/hawtrey-v-keynes-on-the-general-theory-and-the-rate-of-interest/#comment-65361
I pointed that out to Nick saying that I didn't know he was one of the few that realized Keen needed to resort to Lebesgue integration (I was pretty positive Nick didn't know what that was... he never claimed to be a math guru... nor I, but I did encounter it once in grad school oh so many years ago... I recall it as a pretty obscure topic, and I thus I was amazed that it actually might have an application... in econ no less!). Nick confirmed my suspicions telling me "Don't tell anyone, but I don't know what Lebesgue integration is." (I wasn't 100% sure he was going to say that, so I didn't crack wise at first, but truthfully that is what made Andrew's statement [unintentionally?] funny! The thought of Nick Rowe suggesting Keen try Lebesgue integration, of all things, seemed pretty out there).
I do think Sumner sees this as the Good Guys vs. the Bad Guys as did the New Classicals when they first started.
DeleteI mean if you read Freud you know that few things are only 'just jokes'-plus I really do think Sumner has contempt for MMT at least based on anything he's ever said. What absurdity was he pointing out-I'm curious as I didn't see Ralph as saying anything absurd.
Still I should bow to your expertise, as you're the resident 'Sumner Whisperer' as it were, always able to get to the benign kernel behind Sumner's unfriendly snark.
Thanks for the Nick Rowe link.
Oh, I do think Sumner has contempt for MMT and MR and PKE and "endogenous money people" (as Sadowski calls them: although says there's no suchh thing as "exogenous money people" (EMP)... Mark just thinks that the self-identified EMPs have set up a straw-man). At least as far as their macroeconomic ideas go... but I doubt he thinks they're equivalent to Hitler. The absurdity: I don't know... I didn't even read what Ralph wrote: it's just that Sumner obviously thought it was absurd. It was a pretty brutal analogy.
DeleteI still need to read the Rowe article carefully myself.
Check this out
Deletehttp://banking-discussion.blogspot.com/2014/03/toms-epsilon-example.html
... I'd like Nick to take a closer look to make sure I got that all right: he took a quick glace and said it looked roughly OK. There could be an embarrassing mistake in there.. :(
DeleteMorgan,
ReplyDeleteI see where you're coming from. Keynes definitely had capitalism in his veins, but I think his hippy friends from Bloomsbury got the best of him. Remember, this is the guy that called for the euthanasia of the rentier and the socialization of investment. Those are the two things your GI is intended to prevent!
On the other hand, Keynes' ultimate goal wasn't to save capitalism, euthanize the rentier, or even provide full employment; it was to create a social system where everyone, regardless of class, could sleep all day and party every night (or at least work only 15 hours a week). If your GI can deliver that (and political equality), I'm in.
And you're right, I need to read Farmer.
Farmer's interesting but I'm not sure what to make of him yet. If you believe his version of Keynes what's the difference between Keynes and Friedman? Keynes comes across as proto Monetarist.
ReplyDeleteIf this is so why is Sumner so worried about driving a stake through Keynesianism?
I'm not so sure that Keynes would just be another MMer who believes in small govt if he were around today. The one argument in favor of this view I can imagine is that Keynes was writing at a time when many believed that capitalism had demonstrably failed-with the Depression, etc.
I do think he was opposed to any communist revolution and sa his theory as the one way to avoid this. Un'der this argument you could argue that he feel less pressure to be as radical was he was today.
Still at the end of the day I believe Keynesianism is one thing, Monetarism is another.
By the way, nice to have you join us Jared. Hope this won't be the last time.
ReplyDelete