Saturday, April 13, 2019

Modern Monetary Theory

I don't remember when I first heard about Modern Monetary Theory (MMT). It was either just before or just after I began my academic economics education in 2010. I thought it sounded interesting: mostly standard Keynesian economics, which is good, because Keynes is good. The main reason I like MMT (which should not be confused with what MMT scholars believe to be their most important contributions) is that MMT stands in stark contrast to the balanced budget mania I've been subject to my entire life, before, after, and during my education. I have been told time and again that Government Spending is Very Very Dangerous. Bankruptcy! Default! Runaway Inflation! Bond Vigilantes! Socialism! Cats and Dogs Living Together! The MMT story is completely the opposite: we can't go crazy with it, but government spending by itself is no dig deal if we're reasonably careful about (too much) inflation. On the other hand, nothing about MMT made me want to quit my job, give all my possessions to the poor, and make a holy pilgrimage to Jerusalem UMKC.

Flash back to '99-2000 to around 2005. I started my informal education in philosophy and argument talking about religion on the internet. The nice thing about religion is that they have spent thousands of years developing literally all the shitty fallacious bad-faith arguments for a completely indefensible proposition. I've seen them all, and I can smell bullshit a mile away.

Cut to today. Bernie Sanders hired Dr. Stephanie Kelton, a prominent MMT scholar, as his economic advisor. Alexandria Ocasio-Cortez is rumored* to be hooked up with MMT economists. MMT seems to be gaining prominence on the progressive left.

*relative to my personal knowledge.

In response, I have seen a fair few traditional academic economists, economists that I like and admire, writing polemics against MMT. And with few exceptions, their polemics have reeked of the same sort of bullshit religious arguments I spent the early part of this millennium taking apart. So that makes me curious. Really, it is Krugman, DeLong, and Palley more than Wray and Kelton who have really sparked my interest in MMT.

(So too with Bernie in 2018. Most of the mainstream Democratic party arguments against Bernie and for Clinton also reeked of bullshit. Bernie Bros? Are you fucking kidding me?)

So I'm going to investigate further. I have an MA in economics, so I think I can sort out the primary literature. We'll see how that works out. You can track my progress on my new MMT Page.

There a continuum of possibilities between the extremes of MMT is all that and a bag of chips and MMT is completely full of shit. But even if my evaluation falls toward the latter end of the continuum, I have to ask why MMT opponents are using such lousy arguments. Bad arguments — even against a bad idea — are a sign of either being lazy, ignorant, or stupid or of a hidden agenda.

Of course I suspect a hidden agenda. I maintain that the professional-managerial class, represented by the orthodox Democratic party leadership, are not themselves fascists, but they would prefer fascism to socialism; heck, I think they would prefer fascism to social democracy/welfare capitalism. Even if the technical economics of MMT are bad, I suspect that opponents relatively unconcerned about the technical failings and much more concerned that MMT would legitimize social democracy.

But proving bad intent is very difficult and not really dispositive. So my task for the coming year is to dive into the primary literature, both for and against MMT, come to my own conclusions, and share my analysis and conclusions with you, gentle readers.

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