Friday, May 23, 2014

MMT Skepticism

Since I talked about MMT yesterday, I thought now might be a good time to post this: GROAF & CONTRAKSHUN (Naked Capitalism). But more important are the criticisms that NC articultates before the article, which I suspect are the exact same ones a lot of readers have. I thought it might provide a useful counterpoint:
So my take on the emerging “groaf” and “jawbs” meme at Naked Capitalism is that they reflect well-warranted reader cynicism about proposals to fix the economy. More of the same will merely produce “groaf” which is more income inequality and more environmentally destructive programs like fracking, and “jawbs” which are better than no work but low dignity and badly paid, for entities that treat workers like toilet paper and too often engage in intrusive oversight and impose unrealistic output targets. Obama is the chief salesman for “jawbs”, shilling for badly-paid, sweatshop-condition work in Amazon warehouses as “middle class jobs.”

And as much as I respect the work of MMT scholars and advocates for their persistent and effective efforts in educating economists and the media about monetary operations, credit creation, and the role of reserves, I must confess I get annoyed with some of their other policy recommendations for their Olympian disconnect with the realties on the ground. Yes, a job guarantee is an elegant concept for setting a floor under the price of labor. I have no doubt it would be very effective if it were ever implemented. If we lived in a world of selfless, intelligent technocrats, it would have a decent shot at getting a hearing. But that is not where we are now. As a policy recommendation, it is simply not going to get any traction.

As a result, those who are frustrated with the current political framework are left with no practical steps they can take to try to make things better, not even ones they can call their Senator about or advocate via a letter to the editor in their local paper.

I can see why many readers are looking to community-level action and organizing as the only possible hopeful avenue. It seems to be the only venue left where individuals or small groups can make a difference, given the corruption of pretty much all of the channels for state or regional action. And that focus is also a good defensive posture against the odds that our highly complex and very fragile economic system starts fragmenting sooner than the authorities dream possible.
See also the comments at the end of the article. I don't know if just a fictional device, but the world city proposal strikes me as a bit of classic Buckminster-Fulleresque top-down social engineering, but that's another weakness of us architects - we like to control and design everything from the top down, which is why we tend to get onboard with things like the Venus Project. I prefer a lighter William Morris/Jane Jacobs approach. If there's one contribution that liberatarian thinking has made (and that probably really is the only contribution), it's that people are individuals and there are limits to top-down control. However, I don't interpret this to mean that anything collective is bad and that the anarchy of the "free market" casino should be allowed to rule all, especially since nearly all sectors of the so-called free market are actually controlled and managed by corporate monopolies.

I do hope at least it dissipates some of the fear around the debt, which is wielded as a weapon of mass destruction by elites against the working classes around the world, as well as manufactured crises like the debt ceiling which the plutocrats use in their shadow-war against the United States government. Even a lot of people who are not ideological allies of the Republicans or the plutocrats have bought into this world view hook, line and sinker. The most important part about MMT for me is that it doesn't require drastic changes in the the existing framework, and it describes how money works, whether you choose to believe it or not (like evolution).

The Long Story of U.S. Debt, From 1790 to 2011, in 1 Little Chart (The Atlantic)

The myths and realities of America's debt (CNN)

Who Really Owns the U.S. National Debt? (Townhall Finance)

The Deficit Is Shrinking! (and Nobody Cares) (Businessweek)

Hard-line conservatives see victory in debt limit standoff (BBC)

Handbag economics: The ideology of austerity (Real World Economics Review)

This Is What Accounting Identities Look Like (Econospeak)

What are Taxes For? The MMT Approach (New Economic Perspectives)


  1. What's the problem with top-down design?

    1. The lack of attention to the real needs of the actual users, for starters.


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