Scott Sumner: “I’ll Be Making All the Ironic Jokes Around Here, Thanks”
Oh Scott, why do you vex me so? In the midst of an EconLog post, Scott had this throwaway line (in my bold):
I first got into blogging in 2009 out of frustration over Fed policy. The US obviously had a huge demand shortfall, and the Fed wasn’t doing enough to address the problem. Indeed I believe the Fed caused the huge demand shortfall.
So most people think I’m a demand-side economist. (Some even equate “demand-side” with “Keynesian,” which would make Milton Friedman roll over in his grave.)
Now follow me on this. In order for that parenthetical statement to make any sense whatsoever, surely both of the following statements must be true:
(1) Milton Friedman never said that his occasional focus on monetary aggregates could arguably qualify him as a Keynesian.
(2) Scott Sumner never referred to himself as a Keynesian.
And yet, Milton Friedman famously said there is a sense in which all (sic) economists were Keynesians because they rely on the Keynesian language and apparatus, and Scott once referred to himself as the last New Keynesian economist.
(That giant sucking sound you hear is the universe imploding.)
As the Lord Keynes himself will surely tell you, Keynes wasn’t a New Keynesian. Scott’s use of “Keynesian”, while highly context-dependent, makes perfect sense.
Yeah the context is, when Scott wants to complain about how everyone else is running away from him, he calls himself Keynesian. When someone else says, “Hey, your focus on aggregate demand sounds Keynesian,” he is shocked, shocked.
Conservative New Keynesianism (which was and is skeptical of fiscal policy) is essentially a kind of monetarism:
https://fixingtheeconomists.wordpress.com/2014/08/04/inflation-is-not-always-and-everywhere-a-monetary-phenomenon/
https://fixingtheeconomists.wordpress.com/2014/02/07/what-is-the-monetarist-position-on-fiscal-deficits-and-is-it-similar-to-krugmans/
They shade easily into one another. I would imagine when Sumner uses the expression “New Keynesian” or describes himself as one that is how he understands it.
And I’m right.
“Essentially”
“A kind of”
“Shade”
“Context dependent”
Gold Jerry, gold!
Anyone can say anything and not say anything by using those weasal words.
New Keynesians borrowed some of Friedman’s ideas, in particular the idea of the stimulus provided by “helicopter money”.
http://www.garynorth.com/public/10536.cfm
Equating funny money “demand” with honestly obtained private property demand is the essence of Keynesianism. Obscuring the difference means the end of private property, the free market and limited government which is the whole point of the Keynesian hoax. They have succeeded.
Er… why?
Why what?
“Obscuring the difference means the end of private property, the free market and limited government”
The simple answer is that voluntary exchange employing one’s own honestly earned private property is “the free market”. Using government fiat funny money for exchanges is not “the free market” although apparently 99% of the population still thinks it is. Presently, you cannot even apply proper terminology to the very different private property-based free market and a massively interventionist crony “capitalist” system if someone is allowed to use a term like “market monetarism”. The very concept of private property (and thus limited government) has disappeared down an Orwellian Newspeak memory hole.
The central bank is allowed to snatch purchasing power from the powerless and direct it to the powerful while the losers have no cognizable claim to file in a court of law because the operational process of this continuous theft has been defined out of existence.
So increasing the supply of money is somehow theft? What about increasing the number of landscape photographs or buttons? Is that theft as well?
Come on now. Surely you’re aware of the Austrian position on how printing money transfers wealth after all this time commenting on this blog. I’d only expect a response like that from somebody that is completly oblivious to ABCT.
If you are truly unaware of the Austrian position this start here. https://mises.org/library/what-has-government-done-our-money
It is theft of purchasing power, because it is grounded on aggression, not voluntarism.
If tomorrow the government made it mandatory to pay taxes in buttons, and the government monopolized the issuance of buttons, or delegated some of its button making powers to a select few “private” button making firms, who are fully regulated by the government, then yes, as the government issues buttons to its preferred special interest groups in exchange for their garbage, the devaluation of everyone else’s buttons, which occurs because they are coerced into such an arrangement, is very much theft of purchasing power.
Your sarcasm is hollow, ignorant, and shows you have a supreme ability to fumble over the concepts of subtlety and sophistication.
Our opponents get it. They just don’t want to think about it and admit it. Is there one libertarian position that is actually fairly and thoughtfully engaged by our opponents? Ever? Nazis in Ukraine? Blowback from intervention? Funny money causing price distortions? Private associations being able to “solve” the drug “problem”?
They have nothing. Ever. They know it. Otherwise, they would try and refute us. Their evasion is their admission.
Major Freedom has a point, but, while Cantillion effects apply, the Fed printing money doesn’t “transfer wealth” because the Fed prints money by buying bonds, not just handing it out to people.
Major Freedom, I see that you have a point in your description. But if the market makes gold the dominant currency, how is gold miners mining new monetary gold not “theft” if the transition costs are too high to switch to a new currency, while QE is?
E. Harding,
Their arguments boil down to a flawed moral argument against government coercion — that is it.
If they were pressed, they’d quickly admit that they wouldn’t object to private agents increasing the money supply and causing inflation and “robbing” people of purchasing power.
That entails that their objection really isn’t to increasing of the money supply per se. But most of them would be too stupid to see that.
I guess if there was one particular entity that used military power to ensure it was the only one that could increase the number of landscape photographs, while also insisting that everyone accepts said photographs as settlement for any and all debts… I might see that as some sort of wealth transfer under arms.
To the extent that people understand what is going on it’s more correctly called “robbery”, but when it happens by stealth then “theft” is a more appropriate term.
LK that response you have given in the past has already been refuted a hundred times over.
Not all transfers of purchasing power are theft because not all are based on coercion like central banking. Voluntary exchanges are transfers of purchasing power, but not theft.
The indirect, non-face to face transfers of purchasing power in a free market of money are not theft because none of the individuals who are using the given commodity as a money are being forced to pay the issuers of said currency in the absence of voluntary contracts, nor do the issuers have a legal monopoly in such inssuance. So anyone who lives in such a world would have the legal freedom to produce the same commodity as money.
Just because you can replicate the MECHANICAL process of a cold blooded murder with a purely voluntary act of consensual euthanasia or suicide, it does not follow that all of a sudden to be against cold murder and calling it morally wrong, somehow obligates one logically to be against euthanasia and suicide and calling them morally wrong as well.
What you are doing is completely contradicting the meaning of theft by pretending theft does not occur in instances of involuntary, coercive behavior as long as the coercers are wearing government badges.
I guess to you the UK government forcing themselves on little children is not rape, because after all, to think it is would mean we have to have a “flawed” view of coercion right?
E Harding,
It does not matter what goes back to the Fed in return. It is the fact that the increase in the quantity of money devalues everyone else’s cash balances, and those who are in the “privileged” position of not experiencing a rise in their incomes unless others do first, that is where the coercive transfer of purchasing power takes place.
The bonds the Fed “buys” tend to be priced higher than they would be than if the Fed bought my weekly garbage.
According to LK, if a pedophile runs for a government position through “social democratic” means, and they are now given the magic title of “Minister”, then their pedophilia suddenly becomes consensual sexual relations with the populace.
LK’s logic of what constitutes “coercion” changes when a person is “elected” to be among the “social democracy” monopoly coercers.
Rape creases to be rape when the person was “voted in” (also known as being “made” as in the regular mafia) according to LK’s holy high chair.
The first comment does nothing but confirm that your objection is a moral one: you do not object to people increasing the money supply privately and causing inflation, but object on moral grounds to the coercion involved if government were do it.. Exactly what I said.
The second comment is a bizarre slander — especially when it is would be a sick and grotesque Rothbardian system that would abolish all criminal laws on pornography and consensual sex involving underage people.
Your Rothbardian system would be make most forms of sexual abuse totally legal.
This is what would happen in your insane world, Major_Freedom:
“In a purely libertarian society, the young child is not as bereft as might at first appear. For in such a society, every parent would have the right to sell their guardianship rights to others. In short, there would be a free market in babies and other children.”
Rothbard, Egalitarianism as a Revolt Against Nature, and Other Essays, p. 153.
And I bet you fully endorse this insanity too.
There certainly would be effective non-aggressive sanctions in place to deal with parents who violated societal norms. But since you can understand neither the empirical lack of evidence of market failure requiring a funny money regime or a theoretical application of possible non-aggressive solutions to problems, you wouldn’t understand.
LK:
“The first comment does nothing but confirm that your objection is a moral one: you do not object to people increasing the money supply privately and causing inflation, but object on moral grounds to the coercion involved if government were do it..”
Arguments claiming an activity is theft AND your argument that the activity is not theft, are necessarily “moral” arguments.
You have an internally inconsistent set of premises that lead you to claim among other things that the transfer of purchasing power inherent in the very much involuntary central banking hegemony is not theft of purchasing power, whereas I do.
You have since day one objected to the libertarian view, and made positive claims of your own, moral beliefs!
Pointing out that libertarianism is a morality, without also pointing out that social democracy is a morality, really do nothing to advance your argument, if that is what you believe it does.
“The second comment is a bizarre slander — especially when it is would be a sick and grotesque Rothbardian system that would abolish all criminal laws on pornography and consensual sex involving underage people.”
It is not slander, it is an identification of the logical conclusion of your own professed principles that you have written on this blog.
“Your Rothbardian system would be make most forms of sexual abuse totally legal.”
That is incorrect. Absolute private property rights prohibits any and all non-consensual interaction, including sexual abuse.
The UK government is filled with pedophiles, and the Hayekian “worst rises to the top” theory of states is a very apt description of what is taking place there.
“This is what would happen in your insane world.”
Nope, your world is insane, not mine. Your world is so insane that it results in child pornography rings within democratic governments.
“In short, there would be a free market in babies and other children.”
Nothing wrong with parents giving their children up for free in your ideal.
And you actually expect me to believe that the exact same activity, the only difference is that the parents receive pieces of paper with dead leaders printed on them, that happen to be widely circulated in exchanges, suddenly turns the entire enterprise of parents giving their babies to other parents, “insane”?
That is just immature prejudice against money, likely brought about by a deep hatred of money, as all socialists tend to suffer from.
Nothing of what you said above even engages the argument I made. I say X, and your response is effectively ” B-b-b-but Rothbardianism!”
Weak.
The end of private property:
“Oregon Labor Commissioner Brad Avakian on Thursday ordered the owners of a former Gresham bakery to pay $135,000 in damages to a lesbian couple for refusing to make them a wedding cake.”
http://www.oregonlive.com/business/index.ssf/2015/07/sweet_cakes_final_order_gresha.html
Damages?
What DAMAGE did the bakers cause on the persons or property of the couple?
Those two people are jerks.
Waaaah, he won’t bake us a cake.
Disgusting.
I’m all for individual rights, which means I am willing to accept it if a baker does not bake me a cake because he doesn’t like the way I look, or who I date.
I won’t sue someone who does not want to trade with me. There us no rational grounds for it.
This country is going down the tubes everyday.
Quit thinkin’ so much and just bake the cake.
http://tinyurl.com/pfsv9xl
Lesson #1:
Don’t F%&K with people and harass them due to some abstract social cause or holistic belief, because at some point there will be payback and innocent people will get caught in the cross-fire.
Oh, and don’t risk harassing any group of people that may one day use the power of the state for their own perverse desires, like forcing people to bake them a cake.
Actually for the parenthetical statement to be true, it’s necessary for Milton Friedman to consider himself a demand side economist, and for himself to nevertheless consider himself to not be a Keynesian.
But even taking the parenthetical statement and the part immediately preceding it, Scott has an easy out on this one, Bob. You’re reading him as saying not all demand side economics is Keynesian. But “Some even equate “demand-side” with “Keynesian,”” could also be read as him saying Keynesianism isn’t demand side economics. If you read the statement like that:
1. Scott is saying “Yes, I’m a Keynesian, but that doesn’t make me a demand side economist!”
2. Scott believes that Milton Friedman would take similar umbrage.
(And before anyone says anything, personally, I agree with Bob that Scott’s statements come across as odd, but this is like one of those situations with Krugman where he’s phrased things in a way where he could easily say he meant something other than the obvious interpretation as an “out” later. I’m calling out this pattern more than I’m criticizing Bob’s point)
Now you have said that, your interpretation makes sense.
Before you said that, I really couldn’t grasp what Sumner was on about either, but since that happens to me quite often when reading Sumner I no longer wrestle with it all that much.
By the way, Friedman probably would have objected to being called a demand sider, but if you check the Gary North article above, in a roundabout way Friedman did actually advocate for government spending (without ever saying so directly). This could put him perhaps one footstep into the Aggregate Demand camp.