Look here. (I had never heard that Schumpeter attribution before, but the MMT guy used quotation marks so I thought something more subtle was going on than a mere slur.)
I remain flabbergasted that an entire “school” of “economics” such as MMT could be so completely free of understanding of any economics. Once people have adopted a mechanical vision of society, they just won’t let it go.
Robert P. Murphy (What does the p stand for? PAID OFF!?!?!) is merely one of the million snakes that writhe upon the koch medusa head which wants to turn our future into stone!
I’m so disappointed in the MMTers. I was expecting a blow by blow refutation of the basic concepts of praxeology. Instead, we get:
Apart from the fact that he is ignoring MMT and other post-Keynesian calls for spending financed by high-powered money creation rather than taxation, he just shows little appreciation for the actual and potential productivity and importance of government spending.
Personally, I cannot believe that for all these years, Bob Murphy has ignored calls for spending financed by “high-powered money creation rather than taxation.” I’m shocked.
And what’s this about showing “little appreciation for the actual and potential productivity and importance of government spending”? What appreciation?
I think he means the magical road that could not ever be financed and run privately, because the road builders would charge $1 million per mile, and everyone would be stuck at home, unable to drive, so luckily there is government to save us all, preventing open competition in road production, such that they have a virtual monopoly in it, whereby if people do use them, then that vindicates the entire arrangement.
Yes, we do agree. Above I was merely alluding to the fact that even though it costs more and more to maintain the roads, they keep getting crappier and crappier. Hmm, almost sounds like the public educational system.
MMT makes be sincerely worry about public education… and I even went to a public school. Only now am I starting to realise just how bad it is out there.
By the way, Sydney has been adopting toll roads for some time, and they are excellent roads. Best of all, the private road is under contract to turn back to the public after a fixed number of years, after which time the toll goes away. Unlike our famous Harbour Bridge which still collects tolls to go into government revenue long after it paid for itself many times over.
A contract is a whole lot more trustworthy than a government promise, that’s for sure.
I presume your lame attempt to target the person demonstrates you have nothing relevant to say about the issues.
Perhaps you can explain how an economic theory that ignores price, ignores all goods and commodities and ignores stock levels, can be useful as a policy instrument.
I presume your lame attempt to target the person demonstrates you have nothing relevant to say about the issues.
Sometimes the nesting on here is misleading, but Tel, if you were directing that at Aristos, it was a case of friendly fire. His two comments have been sarcasm and a joke thus far on the thread. He is no fan of MMT.
I hereby apologize to Aristos for the dreadful slander of insinuating a belief in MMT.
On the lesser matter of Aristos filling up an economics blog with disgusting personal jibes, he is welcome to be embarrassed about that in his own good time.
That is not a private road, but a privately administered public monopoly, and it is only as good as the contract between the private administrator and the government.
Toll roads or bridges can be under public or private administration. Under public administration it is not necessary for the tolls to only recoup for the investment and maintenance costs.
All private property exists as a contract between government and some private individual, or company of individuals. If government ceased to exist, there would be no more property rights either (until individuals made a treaty amongst themselves which would in turn form the basis of a new government). The fact that the property has a time expiry after which it reverts back to the public does not make any intrinsic difference. Patents also have a time expiry, as does copyright, as does a loaf of bread or bunch of bananas.
Of course a badly worded contract can spoil any project, and badly implemented property rights can be a nightmare that generally wastes time and money in endless court battles and political shenanigans. That’s why we have legal teams getting paid well above the average salary to ensure such things get sorted out properly and efficiently.
However, when implemented properly, the issuance of property rights provides incentive for investment and maintenance that can benefit both the individual and the society as a whole.
I totally agree with you, except for the part about legal teams.
My point is that a privately ran road which is still a public monopoly, is quite different from the free market of private roads that is often advocated here.
For all of the toll roads I know of, there are ways to drive around them and not pay a toll if you wish. It is not really a monopoly, or at least no more of a monopoly than people who fence their yard or lock their front door.
It may be a bit farther to avoid the toll, and in some cases the non-toll road fills up with congestion because other people also want to avoid the toll. Over time it balances out based on price and on willingness to pay. Some investments make more money than others, as decided by market forces, and shares in those investments can be traded just like any other property.
The only thing that makes such property rights different from other property rights is the expiration after a certain time. However, even this expiration is subject to market forces. If people will voluntarily invest their money on a 20 year property right, then offering them a 30 year property right would be overly generous. Thus the private property rights that the government sells are worth what people are willing to pay for them (presuming such investment is made in a genuinely free market environemnt).
An attempt at refutation of praxeology would necessitate at least a remedial understanding of the material. It’s much quicker to throw insults and dismiss it entirely.
This was published in Mike Norman’s blog? Why even bother reading. I’ll forget everything about Austrian economics if I spend 5 minutes listening to Mike Norman. Like I’ve said before, we need to put Mike Norman is a glass cage, sell tickets to the public who will then point and laugh at him and donate those proceeds to the Mike Norman retirement fund. I’m positive he’ll need it if he followed his own idiotic advise.
Hey Austrian dudes,
I’ve been a student of MMT and the Austrian school of economics (just like Ed Harrison of http://www.creditwritedowns.com/ and John Harvey of blogs.forbes.com/johntharvey/ ). Lets not be divided and conquered. We all want to understand how the economy works, we both have been shunned by the mainstream, and we can only learn by taking the time to learn what everyone is trying to say, even when our first impulse is to strongly disagree and stop listening. When I read comments that are venomous it just lowers everyone’s will to continue in good faith.
MMTers have made some major contributions to economics. Scott Fullwiler’s Sector Balance Model of Aggregate Demand (http://neweconomicperspectives.blogspot.com/2009/07/sector-financial-balances-model-of_17.html) which says any model of the economy must be stock/flow consistant for it to be logical. Stephanie Bell’s detailed examinations of how the Federal Government funding operates (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=115128) and the Higherarchy of Money (http://ideas.repec.org/p/wpa/wuwpma/9805014.html). L. Randal Wray’s work on financial instability, and history of money and a lot more. It’s a very rich body of work, and it’s best to learn about MMT from the actual scholars rather than their minions, as well intentioned as they are. Hopefully reasonable minds will prevail, and good economic policy can be put into place as a result.
Thanks for the courteous note. Can you give us an example of something that the Austrians are recommending, that is a disaster because of MMT’s insights? The only thing I’ve seen is that Warren Mosler et al. think it would be bad for the government to cut spending right now. But in my Mises.org article, I spelled out why I thought that was wrong. Some MMT people responded, but I was not convinced.
So, I did try to give MMT a chance, and so far I don’t see what benefits there are to incorporating its approach. But I am open minded if you want to give it a shot.
You’re referring to this rather vague observation the Fed made about banks seeking reserves after the fact (it’s sort of the Wannsee Protocol of MMT). Assuming this claim is accurate, why is it so relevant?
Jon, isn’t that the constraint that really matters (capital) when it comes to banking? We all know that liquidity isn’t an issue in our current system, but actual capital is. What is liquidity without capital? Nothing, I say.
That the banking system is allegedly not constrained by reserves (if true) simply means that the possibilities for mischief under the fiat funny-money system are even more horrifying than we originally thought. All Austrian criticisms of the fiat system still apply.
A primary purpose of the constitutional system of gold and silver coin as money was to CONSTRAIN the government which must be constrained. AP Lerner does not even understand the concept of economic calculation, the core Austrian concept, and thinks that MMT has abolished the law of scarcity.
Although AP Lerner never mentions this, MMTers seem to differentiate between government being potentially unconstrained as opposed to purposefully self constrained. Here is a quote from “Modern Monetary Theory—A Primer on the Operational Realities of the Monetary System” by Scott Fullwiler, Associate Professor of Economics at Wartburg College and MMT guru:
Having said that, MMT’ers are keenly aware that governments can and do write laws that their treasuries’ operations be legally bound in certain ways. For instance, the Fed is constrained by law to only purchase Treasury securities in the “open market,” is thereby forbidden from directly lending or providing overdrafts to the Treasury. In other words, “specific” cases can and do differ from the “general” case MMT’ers describe for a sovereign currency issuer under flexible exchange rates in the sense that self-imposed constraints specify particular operations.
Without success, I tried to engage this new Mike Norman cohort of MMTers into explaining the origin of their notions regarding the necessity of state coercion in economic life. I failed. A slippery bunch, they are.
Yes, I failed to turn them into intelligent and thoughtful people.
Just like you did, they helped prove that MMT is acatallactic by having a hissy fit about an example concerning barter. You cannot engage MMTers even at a basic level of clarifying definitions.
For definitional purposes, one must start with a simple barter example and then move on to a more complicated example using commodity money. Once everyone is on the same page at such point, it is then up to the MMTers to show why it advantageous and/or necessary to go to the next step and introduce fiat money and the statist regime.
The fact that the MMTers have a hissy fit as we try to explore the logic behind the alleged necessity of going to that next step (which, in fact, consists of the core MMT and Keynesian principles/policies) demonstrates that the MMTers aren’t serious and/or particularly bright.
No, when analysing current economies, you must start from the fact the people work to earn and save those cute unbacked pieces of paper or, even better, to get the number in their bank account marked up.
There is no coconut, stick, cow, horse, or donkey involved in the process.
You have to be able to show that the fiat system is better than the Austrian commodity money system. If it’s better, so be it. If it isn’t and it’s the cause of our problems, it needs to be scrapped. You half-wits know you would the lose that debate so you won’t allow it to proceed.
No, we are just interested in understanding and explaining the modern monetary system, and point out all the problems that arise from people thinking as if it were a barter economy, or a commodity money economy, with saved coconuts, and cows traded for horses.
The little tantrums the MMTers throw when you try to explore going to the next step of their statist regime and state fiat money is a form of political correctness. They want to shut you up so the debate (which they would lose) may not proceed.
To be honest, I also thought he was calling you a douche. But now I’m not so sure. I guess I’ll wait for that clarification.
Look here. (I had never heard that Schumpeter attribution before, but the MMT guy used quotation marks so I thought something more subtle was going on than a mere slur.)
Heilbroner was a student of Schumpeter’s.
I remain flabbergasted that an entire “school” of “economics” such as MMT could be so completely free of understanding of any economics. Once people have adopted a mechanical vision of society, they just won’t let it go.
Robert P. Murphy (What does the p stand for? PAID OFF!?!?!) is merely one of the million snakes that writhe upon the koch medusa head which wants to turn our future into stone!
I always wondered about that ‘P’ too. ‘Paid off’ might make sense, if we say that ‘Pissed off’ would be Robert P.O. Murphy.
Btw, that was my attempt at a really bad joke, where I was trying to make fun of Teqzilla, not Robert. Re-reading it, I realize just how bad it was.
Yeah, they paid him so much that you cannot otherwise refute his arguments.
I’m so disappointed in the MMTers. I was expecting a blow by blow refutation of the basic concepts of praxeology. Instead, we get:
Apart from the fact that he is ignoring MMT and other post-Keynesian calls for spending financed by high-powered money creation rather than taxation, he just shows little appreciation for the actual and potential productivity and importance of government spending.
Personally, I cannot believe that for all these years, Bob Murphy has ignored calls for spending financed by “high-powered money creation rather than taxation.” I’m shocked.
And what’s this about showing “little appreciation for the actual and potential productivity and importance of government spending”? What appreciation?
Are you disappointed? Poor thing. Go for a ride on a public road and you’ll feel better.
Oh, you mean the one that wore out my lower control arm bushings in only 18 months time? THAT public road?
I think he means the magical road that could not ever be financed and run privately, because the road builders would charge $1 million per mile, and everyone would be stuck at home, unable to drive, so luckily there is government to save us all, preventing open competition in road production, such that they have a virtual monopoly in it, whereby if people do use them, then that vindicates the entire arrangement.
I think he means that one.
I mean the one that gives meaning to Roddis’ Rothbardian life of course.
Glad we agree we need more public spending on public infrastructure.
Or, alternatively, privatize the roads!
That’s what I was thinking, Jon.
Oh, so you do mean the magical roads that only government can provide, the same government that gives your life meaning.
Glad we agree that roads should be privatized.
Yes, we do agree. Above I was merely alluding to the fact that even though it costs more and more to maintain the roads, they keep getting crappier and crappier. Hmm, almost sounds like the public educational system.
MMT makes be sincerely worry about public education… and I even went to a public school. Only now am I starting to realise just how bad it is out there.
By the way, Sydney has been adopting toll roads for some time, and they are excellent roads. Best of all, the private road is under contract to turn back to the public after a fixed number of years, after which time the toll goes away. Unlike our famous Harbour Bridge which still collects tolls to go into government revenue long after it paid for itself many times over.
A contract is a whole lot more trustworthy than a government promise, that’s for sure.
“It’s ‘good, cold douche’ time”–isn’t that one of your old pick-up lines?
I presume your lame attempt to target the person demonstrates you have nothing relevant to say about the issues.
Perhaps you can explain how an economic theory that ignores price, ignores all goods and commodities and ignores stock levels, can be useful as a policy instrument.
Tel wrote:
I presume your lame attempt to target the person demonstrates you have nothing relevant to say about the issues.
Sometimes the nesting on here is misleading, but Tel, if you were directing that at Aristos, it was a case of friendly fire. His two comments have been sarcasm and a joke thus far on the thread. He is no fan of MMT.
I hereby apologize to Aristos for the dreadful slander of insinuating a belief in MMT.
On the lesser matter of Aristos filling up an economics blog with disgusting personal jibes, he is welcome to be embarrassed about that in his own good time.
That is not a private road, but a privately administered public monopoly, and it is only as good as the contract between the private administrator and the government.
Toll roads or bridges can be under public or private administration. Under public administration it is not necessary for the tolls to only recoup for the investment and maintenance costs.
All private property exists as a contract between government and some private individual, or company of individuals. If government ceased to exist, there would be no more property rights either (until individuals made a treaty amongst themselves which would in turn form the basis of a new government). The fact that the property has a time expiry after which it reverts back to the public does not make any intrinsic difference. Patents also have a time expiry, as does copyright, as does a loaf of bread or bunch of bananas.
Of course a badly worded contract can spoil any project, and badly implemented property rights can be a nightmare that generally wastes time and money in endless court battles and political shenanigans. That’s why we have legal teams getting paid well above the average salary to ensure such things get sorted out properly and efficiently.
However, when implemented properly, the issuance of property rights provides incentive for investment and maintenance that can benefit both the individual and the society as a whole.
I totally agree with you, except for the part about legal teams.
My point is that a privately ran road which is still a public monopoly, is quite different from the free market of private roads that is often advocated here.
For all of the toll roads I know of, there are ways to drive around them and not pay a toll if you wish. It is not really a monopoly, or at least no more of a monopoly than people who fence their yard or lock their front door.
It may be a bit farther to avoid the toll, and in some cases the non-toll road fills up with congestion because other people also want to avoid the toll. Over time it balances out based on price and on willingness to pay. Some investments make more money than others, as decided by market forces, and shares in those investments can be traded just like any other property.
The only thing that makes such property rights different from other property rights is the expiration after a certain time. However, even this expiration is subject to market forces. If people will voluntarily invest their money on a 20 year property right, then offering them a 30 year property right would be overly generous. Thus the private property rights that the government sells are worth what people are willing to pay for them (presuming such investment is made in a genuinely free market environemnt).
An attempt at refutation of praxeology would necessitate at least a remedial understanding of the material. It’s much quicker to throw insults and dismiss it entirely.
This was published in Mike Norman’s blog? Why even bother reading. I’ll forget everything about Austrian economics if I spend 5 minutes listening to Mike Norman. Like I’ve said before, we need to put Mike Norman is a glass cage, sell tickets to the public who will then point and laugh at him and donate those proceeds to the Mike Norman retirement fund. I’m positive he’ll need it if he followed his own idiotic advise.
Wow, this Norman guy has no class.
To clarify Norman didn’t write the specific post.
I mean
Wow, the guy who wrote that specific post has no class.
He
Hey Austrian dudes,
I’ve been a student of MMT and the Austrian school of economics (just like Ed Harrison of http://www.creditwritedowns.com/ and John Harvey of blogs.forbes.com/johntharvey/ ). Lets not be divided and conquered. We all want to understand how the economy works, we both have been shunned by the mainstream, and we can only learn by taking the time to learn what everyone is trying to say, even when our first impulse is to strongly disagree and stop listening. When I read comments that are venomous it just lowers everyone’s will to continue in good faith.
MMTers have made some major contributions to economics. Scott Fullwiler’s Sector Balance Model of Aggregate Demand (http://neweconomicperspectives.blogspot.com/2009/07/sector-financial-balances-model-of_17.html) which says any model of the economy must be stock/flow consistant for it to be logical. Stephanie Bell’s detailed examinations of how the Federal Government funding operates (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=115128) and the Higherarchy of Money (http://ideas.repec.org/p/wpa/wuwpma/9805014.html). L. Randal Wray’s work on financial instability, and history of money and a lot more. It’s a very rich body of work, and it’s best to learn about MMT from the actual scholars rather than their minions, as well intentioned as they are. Hopefully reasonable minds will prevail, and good economic policy can be put into place as a result.
Mr. (?) Reisberg,
Thanks for the courteous note. Can you give us an example of something that the Austrians are recommending, that is a disaster because of MMT’s insights? The only thing I’ve seen is that Warren Mosler et al. think it would be bad for the government to cut spending right now. But in my Mises.org article, I spelled out why I thought that was wrong. Some MMT people responded, but I was not convinced.
So, I did try to give MMT a chance, and so far I don’t see what benefits there are to incorporating its approach. But I am open minded if you want to give it a shot.
One of its benefits would be not making embarrassing calls about hyperinflation.
Although with CPI inflation at 3.6% we are almost there.
Down Goes Strawman! Down Goes Strawman! Down Goes Strawman!
“But I am open minded if you want to give it a shot.”
Start with recognizing the banking system is not constrained by reserves.
You’re referring to this rather vague observation the Fed made about banks seeking reserves after the fact (it’s sort of the Wannsee Protocol of MMT). Assuming this claim is accurate, why is it so relevant?
I think he’s referring to the fact that banks are constrained by capital reserves.
Are you sure? Here he’s says that no kind of reserve (capital or otherwise) constrains banks:
http://consultingbyrpm.com/blog/2011/06/fighting-fire-with-fire.html#comment-18750
I think that AP Lerner has said in the past that banks are capital constrained but not reserved constrained.
OK, thanks, he’s not very clear here.
Jon, isn’t that the constraint that really matters (capital) when it comes to banking? We all know that liquidity isn’t an issue in our current system, but actual capital is. What is liquidity without capital? Nothing, I say.
Well, of course, there is the price structure; but, that isn’t a concern (or, thought) to the MMT crowd.
That the banking system is allegedly not constrained by reserves (if true) simply means that the possibilities for mischief under the fiat funny-money system are even more horrifying than we originally thought. All Austrian criticisms of the fiat system still apply.
A primary purpose of the constitutional system of gold and silver coin as money was to CONSTRAIN the government which must be constrained. AP Lerner does not even understand the concept of economic calculation, the core Austrian concept, and thinks that MMT has abolished the law of scarcity.
Although AP Lerner never mentions this, MMTers seem to differentiate between government being potentially unconstrained as opposed to purposefully self constrained. Here is a quote from “Modern Monetary Theory—A Primer on the Operational Realities of the Monetary System” by Scott Fullwiler, Associate Professor of Economics at Wartburg College and MMT guru:
Having said that, MMT’ers are keenly aware that governments can and do write laws that their treasuries’ operations be legally bound in certain ways. For instance, the Fed is constrained by law to only purchase Treasury securities in the “open market,” is thereby forbidden from directly lending or providing overdrafts to the Treasury. In other words, “specific” cases can and do differ from the “general” case MMT’ers describe for a sovereign currency issuer under flexible exchange rates in the sense that self-imposed constraints specify particular operations.
http://tinyurl.com/3tdadas
I fail to see the glory in unconstrained government.
Without success, I tried to engage this new Mike Norman cohort of MMTers into explaining the origin of their notions regarding the necessity of state coercion in economic life. I failed. A slippery bunch, they are.
My first comment is here:
http://tinyurl.com/3gnajh6
You failed? You must be kidding
Yes, I failed to turn them into intelligent and thoughtful people.
Just like you did, they helped prove that MMT is acatallactic by having a hissy fit about an example concerning barter. You cannot engage MMTers even at a basic level of clarifying definitions.
Just out of curiosity, is Gene always a d&#k. or is that him in his “groove”?
I don’t think what you expected if every time you or Murphy pretend to disprove MMT you bring up saving coconuts or trading cows and horses.
For definitional purposes, one must start with a simple barter example and then move on to a more complicated example using commodity money. Once everyone is on the same page at such point, it is then up to the MMTers to show why it advantageous and/or necessary to go to the next step and introduce fiat money and the statist regime.
The fact that the MMTers have a hissy fit as we try to explore the logic behind the alleged necessity of going to that next step (which, in fact, consists of the core MMT and Keynesian principles/policies) demonstrates that the MMTers aren’t serious and/or particularly bright.
No, when analysing current economies, you must start from the fact the people work to earn and save those cute unbacked pieces of paper or, even better, to get the number in their bank account marked up.
There is no coconut, stick, cow, horse, or donkey involved in the process.
You have to be able to show that the fiat system is better than the Austrian commodity money system. If it’s better, so be it. If it isn’t and it’s the cause of our problems, it needs to be scrapped. You half-wits know you would the lose that debate so you won’t allow it to proceed.
No, we are just interested in understanding and explaining the modern monetary system, and point out all the problems that arise from people thinking as if it were a barter economy, or a commodity money economy, with saved coconuts, and cows traded for horses.
The little tantrums the MMTers throw when you try to explore going to the next step of their statist regime and state fiat money is a form of political correctness. They want to shut you up so the debate (which they would lose) may not proceed.