Thursday, September 12, 2019

Modern Monetary Stupidity

the stupid! it burns!Greg Curtis gives us burning stupidity in not just one but two parts! Modern Monetary Madness and A Closer Look at the “Panacea”. From the first article:
When I think about MMT — Modern Monetary Theory — I visualize an odious miscreation squatting in its squalid swamp for decades, waiting only for an opportunity to erupt from the scum and devour the world’s economies.

Okay, maybe I should be taking my meds…
Or perhaps your employer should be taking a look at your (lack of) basic journalistic integrity.

From the second:
And MMT’s main tenets most certainly qualify as magical thinking. We can reach that conclusion by coming at it in two ways.

First, let’s set aside the True Believers in MMT, most of whom are advising the Progressive Democratic candidates. After all, they obviously believe their own hype. Instead, let’s look to serious economists who reside on the political left and who would be inclined to favor the Democratic policies if there were any way to pay for them.

If MMT made any sense at all, these economists would certainly be embracing it. But, to a man and woman, they aren’t. In fact, they mostly ridicule MMT.

Does Curtis understand the difference between reaching a conclusion and justifying a preconceived opinion? Apparently not. Neither does Curtis understand a basic tenet of intellectual honesty and journalistic integrity, that one must read and analyze the proponents of a claim, and not "set aside" the proponents and examining only the opponents.

A dead giveaway that Curtis has abandoned any pretense of journalistic integrity is his inclusion of completely bogus "evidence". From the first article:
Alas, into this sensible economic theorizing strode an obscure fellow named Abba Lerner, who said to himself, “Wait a minute! If high government spending during recessions is a good idea, then even higher government spending all the time must be a great idea!”
Never mind that MMT does not rely on Lerner, and we all understand that Curtis is not literally quoting Lerner, but if one actually reads Functional Finance and the Federal Debt — or even just the Wikipedia entry on functional finance (unlike Curtis, I actually, you know, cite my sources) — they would quickly discover that Lerner does not say, imply, or endorse any such thing. Curtis's assertion is not just an uncharitable interpretation; it's a flat-out lie.

Curtis also invokes the preposterous Chicago Booth survey. (There I go again, citing my sources. It's really not that hard.)
Fortunately for us, the University of Chicago surveyed hundreds of mainstream economists, asking whether they agreed with MMT’s main ideas (i.e., “spending doesn’t matter.”) Not a single economist agreed, not one. There is probably not another statement you could present to that group and not find at least one person to agree with it.
The problem, naturally, is that literally no MMT scholar ever has endorsed the idea that "spending doesn't matter"; more precisely, no MMT scholar would agree with the questions from the actual survey: "Countries that borrow in their own currency should not worry about government deficits because they can always create money to finance their debt," and, "Countries that borrow in their own currency can finance as much real government spending as they want by creating money." Both questions are appallingly stupid; attributing the underlying attitudes to MMT scholars is again not just an uncharitable interpretation but completely dishonest.

If I had the resources of the University of Chicago, and if I had completely abandoned any academic or ethical standards (but I repeat myself), I could just as well poll a hundred academic economists, asking if they agree that "Governments should never interfere in a market economy, because markets are always correctly self-regulating." Almost all (even the conservative economists, well, at least the three left who cling to a shred of intellectual honesty) would disagree. Wow! I proved that economists think capitalism is ridiculous!

Curtis is doubly lying here. Krugman, Summers, etc. agree with MMT proponents on the very point Curtis wants to rebut, that the government can and should spend more than it receives in taxes when the private economy is not at full employment. I know: I actually teach Principles of Macro from Krugman's textbook. "Left wing" (ha!) economists disagree with MMT theorists primarily on the effectiveness of monetary policy (central bank management of the banking system) on the real economy: MMT proponents consider monetary policy rather ineffective in aligning output and capacity (except at intentionally causing recessions); mainstream economists consider it more effective. We should, of course, settle this dispute by appealing to the data, not to the opinions of "experts".

Don't get me wrong: I'm not mad at Greg Curtis's shenanigans. I find it encouraging that the only critiques of MMT I can find anywhere — in both the popular and academic literature — have to rely on the most transparent of lies and bullshit.

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