R.I.P. Snopes

For more than two decades, I have relied on Snopes to provide accurate and truthful fact checking.

Lambert Strether makes a compelling case that Snopes just bullshits their readers when they claim that the charge that Biden broke his $2,000 stimulus check promise is "Mostly False". 

It's not. Biden made the promise, and he broke it. I dunno, maybe he had good reasons to break it. Maybe he's just an asshole. I don't really care; politicians break promises all the time, and I didn't vote for him anyway.

In On Bullshit, Harry G. Frankfurt defines bullshit as an indifference to the truth, in contrast to a lie, where the liar cares enough about the truth to falsify it. Frankfurt goes on to argue that bullshit is more destructive to truth than lies.

In one article, Snopes has completely destroyed its reputation for caring about the truth. I simply cannot trust anything Snopes says or has ever said. They're dead to me.

R.I.P. Snopes.

MMT Misconceptions part 3b

Continuing with Doug Henwood's essay, Modern Monetary Theory Isn’t Helping, and his treatment of taxes and government revenue.

Misconception: Taxation transfers resources

[O]ur public sector is starved for resources. Taxing takes those resources out of private hands and puts them into public ones.

Well, no. It's not anything like that; it can't possibly be anything like that. Henwood is not getting MMT wrong here; he's getting basic logic wrong. Henwood is at best speaking imprecisely; we could just attribute this imprecision to a desire for concision, but speaking carefully would completely undermine his point.

Generally, the word resource refers to something real: labor, raw materials, capital equipment, intermediate goods, etc. But of course it's nonsensical to suppose — and I don't think Henwood believes any such thing — that rich people have vast warehouses full of machines, equipment, parts, and raw materials, and dormitories full of people they are withholding from the labor force.

Taxes take money away from people who have it. Money is not a resource; it is the social permission to access society's resources. This isn't the 11th century; the government does not impose a tax by taking the food I grow. When I pay my taxes, I am not giving any resources to the government; the government is taking away some of my social permission to access society's resources.

Absent theft and robbery, ordinary people, households and firms, must get money by persuading someone else who already has money to give it to them, eventually in return for real resources. That's just how money works, n'est ce pas? But governments are just not at all like that.

Money is a social system, and someone, some collection of institutions (spoiler alert: the government), has to create and manage money. The government has to create the money, ensure that people want to use it as a medium of exchange and store of value. The government must ensure there's enough money overall to grant the social permission to access all of society's resources, but not so much that people think they have the social permission to access resources that we cannot produce.

No other institution except the government* can manage the money system. We can't just leave money to "the market". Even if you grant that markets have some value, they suck at delivering the kind of rigidly broad uniformity we want from money; governments are terrific at being rigidly uniform. Government does not have to get social permission to access society's resources. Government has this social permission just by virtue of being the government.

*I suppose e could go back to the gold standard, but almost a century ago, Keynes realized the gold standard was a Bad Terrible Idea, and we abandoned its last vestige in 1971.

This is what I meant previously by looking at the control system; it's important to understand how the control system works so we can effectively use it.

This is how money actually works: The government creates money and puts in the hands of the private sector by buying things like airports and bridges, loaning it to banks to manage the payment system, or buying real or financial assets with it. So that people will actually accept and use the government's money, the government imposes taxes that must be paid in the money it just issued, that could not have been be paid unless the government had first issued the money. Because the government wants some of this money to stay in circulation for private transactions, they collect in taxes less money than they issued.

The government takes these taxes and "burns" them. The government does not need your tax dollars; the government imposes taxes in part so that we need them.

Once the money economy gets rolling, the government continually creates money and puts it into the private economy; it collects taxes to destroy excess money.

The government does not borrow money; they offer people interest to take money out of circulation and "store" it in a government "bond". The government does not offer people real resources in return for the "bond", and the government has no need to give anyone real resources to get the money they promise to repay. They not just can but they have not choice but to print the money when the "bond" matures.

I don't care at all how you or anyone else, left, right or center; capitalist, socialist, or anarchist, feels about the above. That's how money actually works. Again, this is not MMT; this is fundamental monetary economics.

Capitalists fucking hate that money works this way. They would much prefer the gold standard, which gives the rich total control of the money system. The only reason they tolerate the fiat money system — and they have no choice but to tolerate it — is that the last time the bourgeoisie tried the gold standard, the peasants started gathering torches and pitchforks.

The bourgeoisie and their loyal ally? unwitting stooge? useful idiot? Doug Henwood absolutely do not want the unwashed masses to understand how the money system actually works. They want you to believe that the rich have the resources we need to run our society, and that the citizenry must either humbly beg them for these necessary resources or fight a long and vicious battle to take those resources away from them.

Neither is true. The rich have nothing but money, social permission, created by the government. We absolutely should take away most (all?) of that social permission, not because we need it, but because fuck you, that's why; we do not want them to have it. If they want to hide their money, let them. Hidden money is out of circulation and useless. If they want to defend their money — and the government really should be careful and legal about how they take anyone's money — that's fine; the government can just freeze the money while the litigation drags on; again, frozen money is no money at all.

The rich may have something we do not want them to have, but they have nothing we need.

MMT Misconceptions part 3a (taxes)

Finally, Doug Henwood's essay, Modern Monetary Theory Isn’t Helping, gets to the crux of the biscuit, taxes and government revenue.

Misconception: Taxation transfers resources

MT’s lack of interest in the relationship between money and the real economy causes adherents to overlook the connection between taxing, spending, and the allocation of resources. We have [all sorts of bad things] because the public sector is starved for resources. Taxing takes those resources out of private hands and puts them into public ones, with at least the potential for them to be spent on more humane pursuits.

Long sigh. This is a complicated and persistent misconception. It's complicated because economics is complicated; it's persistent because the illusion that taxes transfer resources serves the interests of the capitalist class.

Please bear with me as I draw an extended analogy.

Consider an ordinary automobile. One way (certainly not the only way) to think about a car is to divide it conceptually into the physical system, the user interface, and the control system. The physical system consists of the engine, which physically makes the car go, the tires, which physically turn the car, and the brake pads, which make the car slow down and stop. The user interface is what you, the driver, use to control the car: the gas pedal makes the car go, the steering wheel makes the car turn, and the brake pedal makes the car stop. Finally, the control system connects the user interface to the physical system. Pushing the gas pedal down (U) causes a cable to open the throttle in the carburetor, which sucks more gasoline and air into the cylinders, (CS) and the car goes faster.

This is more or less what MMT does (or at least how I read MMT): divide the economy the same way as above. The physical part, the real economy, comprises factories, workers, capital, natural resources, etc. The user interface is money our ordinary experience of money, receiving a paycheck, spending money to buy stuff, paying taxes, etc. The control system is the banking system, including the central bank and the Treasury, which connects our ordinary experience of money to the real economy.

There are a lot of other useful ways to divide the economy, and a lot of other economic topics worth studying; MMT scholars choose to focus mostly on the control system, i.e. the banking system. Moreover, they claim to have discovered (or advanced our understanding of) how the control system works; moreover, they claim the control system does not work the way capitalist economists tell us it works.

(These claims are either true or false. If they are true, they are true even if we don't like that they're true; if they're false, they are false even if we want them to be true. It is instructive that Henwood never analyzes whether or not MMT scholars' claims are true or false, only that they are undesirable, and MMT scholars are ugly and their mothers dress them funny. Of course, I think Henwood is fractally wrong.)

Back to the car analogy. Max Max has a turbocharger on his V8 Interceptor. He has a pull switch installed on the gear shift lever that engages the turbocharger. He pulls the switch and the car goes faster. We would justly consider someone misguided who objected, "Max can't just push a button and make the car magically go faster. Pushing on the gas pedal makes the car go faster." We would consider them willfully ignorant if, when we tried to explain, they retorted, "Don't confuse me with all that 'physics' and 'engineering' bullshit. I know how a car works, and you make it go faster by pushing the gas pedal. If we could just push a button and make the car go faster, then why can't we just put in a button that makes the car go 1,000 miles per hour? Checkmate atheists engineers!"

Henwood makes the same mistake by confusing taxes (user interface) for resource transfers (control system) and exhibits the same willful ignorance by dismissing MMT scholars nerdy wonks talking about boring and mathy topics like accounting and finance. Henwood already knows how the economy works. I mean, he's at least skimmed "Wage Labor and Capital"; what more do we need to know?

In the next installment, I'll dig more deeply into what economists teach undergraduate economics students about macroeconomics (I am an expert in this topic, or at least a professional, because I am paid to do just that) and how Henwood badly mangles even conventional macroeconomics; I will follow with the changes that MMT scholars (as I understand them) propose to conventional macro.

MMT Misconceptions part 2

Let's push on looking at the misconceptions Doug Henwood's essay, Modern Monetary Theory Isn’t Helping.

Note: For clarity, I've added the label "Misconception:" to the boldfaced titles.

Misconception: MMT is about American Exceptionalism

Another serious problem with MMT is its embeddedness in a rich-country perspective, and in particular American exceptionalism. . . . MMT’s unacknowledged dependence on the exorbitant privilege of the United States —Mitchell is about the only high-profile MMTer from abroad — is almost completely unaddressed by its proponents.

American economists study the American economy. Quelle surprise. Granted, the US is indeed an exceptional economy. So what? How much does MMT rely on American exceptionalism, which really is singular, rather than its monetary sovereignty, which is not universal but more broadly shared? As Henwood later mentions, other countries such as "Canada, Japan, and Britain, though to a lesser degree" have monetary sovereignty. Henwood does not, however, compare how MMT applies to those countries which do have monetary sovereignty but not the United States' singular privilege. Instead, he jumps right to Allende and Chavez:

But less privileged countries have to worry about foreign investors dumping their bonds and driving down the value of their currency, which would jack up interest rates and inflation. Salvador Allende’s government greatly increased spending and raised the incomes of the poorest in Chile in the early 1970s; that worked nicely for a while, but then inflation took off. Allende wasn’t operating from the MMT playbook, merely resorting to policies pursued by many progressive governments facing political opposition and resource constraints. But such experiments rarely end well, and similar problems would face a poor country trying to stimulate its way to prosperity today, as we see in Venezuela now.

Wait, what!? Am I reading Jacobin or The Economist? Such experiments rarely end well not because they are economically inept but because the United States sends the CIA or the Marines to put a stop to it.

Misconception: MMT should address International Trade and International Political Economy

Those countries need, for example, to import things priced in dollars, like oil, and the value of their currency has a direct effect on living standards that Americans are insulated from because we can print the currency in which that oil is priced. Brazil, in turn, has even less freedom; it needs harder currencies like dollars and euros to import commodities and advanced manufactured goods; and poorer countries like Bolivia or Ghana have even less. To buy essential imports, these countries often have to borrow in those hard currencies. To pay off the loans, they need to earn foreign currency through exports.

MMT has little helpful to say about that situation.

I will note that not only do MMT scholars say little about IPE, they say nothing whatsoever about the heartbreak of psoriasis. So what? MMT is a theory about domestic monetary and fiscal macroeconomics.

Misconception: Advocates present MMT as a socialist panacea

MMTers show a strange lack of interest in the specificity of capitalism — how production and distribution are organized, how demand for credit arises in the course of commerce, how people earn their living and under what conditions . . . Through the fantasy of effortless keystroke money, all those relations of necessity and power supposedly get wiped away.

Supposedly? Supposed by whom? I've never seen any MMT scholar say that MMT will wipe away capitalist economic relations.

I will grant Henwood that a socialist will not find a complete plan for socialism in MMT. Anyone who thinks MMT is a socialist theory is both dumb and not a legitimate MMT scholar. But Henwood hardly needs however many thousands of words to get there. Just call L. Randall Wray and ask him, Is MMT a socialist theory? To which I imagine Wray would reply, What, are you high or just stupid? MMT is about how to run a capitalist economy. Boom! I could have saved Jacobin however much money they paid Thomas Friedman Doug Henwood. (Sorry, I keep getting those two confused.)

That's enough singing for today, lads. More on the weekend.

MMT Misconceptions part 1

I will skip the pure bad faith propaganda in Doug Henwood's essay, Modern Monetary Theory Isn’t Helping: As the saying goes, "Never wrestle with a pig. You both get dirty and the pig likes it." However, Henwood reproduces many misconceptions about MMT (and basic economics). Whether he reproduces them out of ignorance or bad faith is irrelevant; my task here is to link correct the misconceptions.

Note: For clarity, I've added the label "Misconception:" to the boldfaced titles.

Misconception: "Cool[ing] things down" means "creat[ing] a recession".

Since there is a risk that too much government spending would spark inflation, the government might need to cool things down, meaning create a recession — though Wray shies away from using the word — by raising taxes.

Strictly speaking, this statement is a misconception not about MMT but about basic economics.

I don't know what Henwood actually means by "cool things down"; it's not a precise economic term; Henwood is paraphrasing without a citation, so I can't look at what Wray actually said. It is certainly the case that raising taxes is neither synonymous with creating a recession nor do tax increases necessarily or even usually cause recessions. Tax increases are contractionary, but contractionary fiscal policy is recessionary only if long-run economic growth is near zero. In standard undergraduate macroeconomic theory, when actual output exceeds potential output, some people are working harder than they want to, and they demand more for their loss of leisure than they are producing. The economy will (and should) contract (the short-run rate of growth will at least slow) no matter what the government does; all raising taxes does is to change how the contraction takes place. Without taxes, the contraction will take place through an increase in the general price level; with taxes, the government just takes the excess money out of the economy.

(Of course, if someone doesn't use a word, and Henwood explicitly says that Wray "shies away" from using recession (because contraction is different from recession), basic honesty generally requires some evidence for the imputed usage. The evidence is definitely not to be found in basic macro.)

Misconception: Reserve accounting is irrelevant

Much of the MMT literature is an elaboration of the arithmetic of bank reserves . . . Reserve accounting is important if you’re a financial economist or a central banker, but it’s of limited relevance to anyone concerned with big-picture economic questions.

Wait, what? Central bankers are most definitely concerned with big-picture economic questions. Any intro macro textbook will tell you that reserve accounting is the foundation of orthodox monetary policy. In my principles class, I spend an entire 110 minute lecture on reserve accounting. And it's not that hard; mostly just arithmetic and a little simple algebra, but it does scare some people with deficient education.

More importantly, MMT scholars want to prove that money does not work in the way we think it works, so they have to talk at length about how it actually works. Perhaps they're not correct, but a blithe math-is-scary dismissal is not a critique.

Misconception: MMT should be a theory of everything

Absent from Kelton’s paper, Wray’s book, and much of the subsequent MMT literature, is any sense of what money means in the private economy, where workers labor and capitalists profit from their toil and compete with each other to maximize that profit, a complex network of social relations mediated by money.

Nor does MMT literature address the heartbreak of psoriasis. So what? MMT is not intended to be a theory of everything, to rethink how a capitalist economy works at a fundamental level. Why should it be? Marx already did most of that work.

Misconception: Fiscal policy is impossible

[Abba Lerner's] proposed doctrine of functional finance held that “government fiscal policy, its spending and taxing, its borrowing and repayment of loans, its issue of new money and its withdrawal of money, shall all be undertaken with an eye only to the results of these actions on the economy and not to any established traditional doctrine about what is sound or unsound.” In other words, if unemployment is rising, loosen policy (boost spending, cut taxes, lower interest rates), and if inflation is rising, tighten policy (the reverse). On first glance, this sounds completely reasonable. But on second, it’s a lot more complicated.

For one thing, it often takes time to understand what’s going on in the economy, and it takes even more time to change policy — and sometimes, like in the 1970s, unemployment and inflation are both rising, and it’s not obvious what policy should do in response. Anyone who’s watched Congress struggle with tax and spending policy has to wonder how anyone could believe that fiscal policy could be fine-tuned with requisite speed and precision.

MMTers extend this hubris about the precision and power of policymaking

A lot to unpack and explain here. Please bear with me. Note that I'm going to hold off talking about macro stabilization techniques, both mainstream and MMT, until later.

First, Henwood commits a subtle non sequitur fallacy. They're not completely unrelated, but there's a big gap between how we should measure or evaluate policy goals, and the specific techniques we use to achieve those goals. Saying that we should evaluate policy by its results rather than its soundness does not by itself entail that any specific policy measures, i.e., "if unemployment is rising, loosen policy, . . . if inflation is rising, tighten policy." Henwood's use of "[i]n other words," is absolutely dishonest, as if he were rephrasing Lerner instead of drawing a conclusion.

I'm not saying socialists should never talk about fiscal policy lags, but this trope is such a pro-austerity conservative laissez-faire bourgeois talking point that an honest socialist must handle it with full hazmat gear. Indeed, Henwood's use of hubris, plus the connection of functional finance to policy lags to hubris, is a direct invocation of bourgeois arguments against socialism: it is hubris to believe that the government could have any role in managing anything as complicated and subtle as a market economy. I'm a socialist, so that's not an argument that I want to get anywhere near my own lips.

Fiscal policy is indeed difficult, which is why principles of macro by itself (where I teach my students about fiscal policy lags) is not a sufficient qualification for holding the Fed chair. But thinking that a lot of smart well-educated people can do something merely difficult is hardly hubris.

Although taxes do work reasonably well as an "fine tuning" automatic stabilizer, literally no economist anywhere — including MMT scholars — thinks that using conventional fiscal policy (building bridges, airports, etc.) is an effective tool for fine tuning an economy for exactly the reason that Henwood lifts out of a dimly remembered or badly garbled sophomore economics class. So what? That's not the argument that anyone is having, and that has nothing to do with functional vs. sound finance.

I can tell a lot about a firm (or a household) just by looking at their books and not their real business. Specifically, I'm looking at things such as cash flow, net profit, and debt to income ratio. I know what those numbers should look like, and if they don't look the way they should, the firm is in real trouble.

Sound finance says that to some degree or another, we can tell how a government is doing just by looking at its books, or at least that we should pretend that ordinary accounting criteria that are important to households and firms are just as important for a government.

Functional finance says that we can tell very little, if anything at all, just by looking at the government's books; instead, we must look at the real economy, i.e. at GDP, inflation, employment, investment, etc. to determine how well the government is doing. If a firm is running up a lot of debt, that's troubling by itself. For a government, we don't know: is the debt causing inflation? If not, well, the government is all right for now. If a firm has positive cash flow, that's great. For a government, we don't know: is the positive cash flow causing unemployment? If so, the government is in trouble. Functional vs. sound finance is about what we should look at to determine what to do; neither offers a specific prescription on what to do about what we see.

There's a deeper economic philosophy in play. Sound finance is the position that the government should be (or should pretend to be) part of the market economy, subject to the same market discipline that capitalists apply (or pretend to apply) to themselves. Functional finance says that the government is not part of the market economy, it manages the market economy. Naturally, the capitalist class prefers sound finance.

(Yes, as a socialist, I'm against markets in general. The socialist point here is that I argue that positioning the government as not a part of but the manager of a market economy is a useful step towards socialism. And there is an argument that a capitalist government cannot effectively manage a capitalist economy not because that task is too difficult but because it is a capitalist government. Henwood does not make this argument.)

Misconception: Monetary policy is just like fiscal policy

To extend (in bold) the ellipses at the end of the last quotation:

MMTers extend this hubris about the precision and power of policymaking to the realm of interest rates . . .

Wait! Stop! Monetary policy, i.e. interest rates, is completely different from fiscal policy, and is subject to fewer and very different lags. Conventional macro already holds that the central bank can fine tune the economy.

Misconception: MMT holds that monetary policy can fine tune the economy

To finally complete (in bold) the ellipses above:

MMTers extend this hubris about the precision and power of policymaking to the realm of interest rates, which they think the central bank is completely in control of and should be kept as close to zero as possible.

Sigh. One of the points I learned to look for when I debated religion (and especially creationism) on the internet was when a writer contradicted him- or herself in the same paragraph. Henwood manages to contradict himself in a single sentence. If MMT economists want to keep interest rates near zero without qualification, then they do not want to use interest rates for fine tuning.

And indeed MMT scholars argue not that we should not but that we cannot fine tune the economy with interest rates. MMT scholars argue that businesses' expectations of profit determine most investment; interest rates by themselves do very little. Moreover, because people hold bonds for income, interest rates have the opposite effect on consumption than they do on investment.

Misconception: MMT economists do not understand interest rates

Although MMTers tend to talk casually of “the” interest rate, in fact there are many. Long-term government bonds, for example, are almost always going to carry higher rates than short-term ones, because so many more unpredictable things can happen before the bond reaches maturity. And either is going to yield less than a bank loan of similar maturity to an oil wildcatter or the corner bodega, because of the higher risk of default.

Thank you, Mr. Henwood, for explaining to a bunch of people with PhDs in economics what I teach my sophomores about interest rates. I'm sure they are most grateful for lesson. </snark>

Talking about the imaginary singular interest rate is endemic among economists in general, for a lot of boring technical reasons, sometimes just laziness. For one, risk- and maturity-adjusted interest rates should all be about the same, because that's how markets usually work. But because people are exceptionally bad at judging risk (not to mention uncertainty), markets don't always work the way they're supposed to.

When MMT economists talk about the interest rate, they usually talk explicitly about the Federal Funds rate, the rate at which banks loan each other reserves overnight, which is indeed singular and which the Federal Reserve can indeed completely control, and which does indeed influence other interest rates at least a bit. If any MMT economist has said that all interest rates should be near zero regardless of risk or maturity, I would like to see a citation, because that economist should be stripped of their PhD and forced to repeat their sophomore principles classes.

Misconception: MMT scholars don't understand inflation

MMTers are coy about [inflation] — they never say how much is too much, and they profess great confidence in their ability to control it.

Ok... How fast is too fast? It depends. On what? A lot of things; I can't put it in a soundbite for you. But let's proceed.

In a paper criticizing MMT, the left-Keynesian economist Thomas Palley says he’s heard a “leading” MMTer say inflation less than 40 percent is “costless.”

Objection! Hearsay! Sustained. Move on counselor.

<snip long discussion about hyperinflation> Weimar Germany may be an extreme case, but since it’s often brought up by critics of MMT — “won’t all that keystroking lead to inflation, like Argentina or Weimar?” — it’s one for which they need to have a good answer. Wray’s reluctance to face head-on the risks of printing money makes you wonder how confident he really is of his own theory.

Printing "too much" money is only the proximate cause of hyperinflation, in just the same sense that turning on the heat is only the proximate cause carbon monoxide poisoning. It's a bugaboo, moreover a bugaboo hysterically promoted by capitalist economists against Allende Chavez socialism. Hyperinflation is just not a risk in a country with an otherwise well-functioning government that can effectively collect taxes; if its government is dysfunctional, the country has worse problems than just hyperinflation.

MMT scholars talk how to control inflation all the time. It's really not that difficult. You suck money out of the banking system and the economy by selling bonds, or you (gasp! horror!) raise taxes.

But raising taxes is hard! No shit, Sherlock: economics is hard. Running a government is hard. People go to school for years just to start to learn how to do it.

(Maybe they should just go to journalism school and write dishonest hatchet jobs. Hell, it works for David Brooks and Thomas Friedman, maybe it'll work for Henwood; perhaps he'll go all James Burnham on us and join the AEI.)

But people hate taxes! Really? You don't say! Do they love recessions? Because that's how to control inflation without raising taxes.

Actually, people don't hate taxes, capitalists hate taxes, and they tell the people what to think. Henwood approves of taxes, and good on him, I do too, and so do MMT scholars.

Damn! This is getting long, and we're only about a third of the way through Henwood's mess. Let's take a break here and pick up where we left off in a day or so.

MMT and socialism

It's always depressing to read "socialist" polemics against Modern Monetary Theory, and Doug Henwood's essay, Modern Monetary Theory Isn’t Helping in "socialist" Jacobin magazine follows the trope: nothing but bad faith and a Gish gallup of ridiculous capitalist propaanda.

It's clear Henwood is arguing in bad faith. With suitable elisions, Hemwood more or less accurately presents a core concept of MMT:

As Wray put it, “The government does not ‘need’ the ‘public’s money’ in order to spend; rather the public needs the ‘government’s money’ in order to pay taxes. Once this is understood, it becomes clear that neither taxes nor government bonds ‘finance’ government spending.” . . . Since there is a risk that too much government spending would spark inflation, the government might need to cool things down . . . by raising taxes. Taxes, MMT holds, should be used as tools of economic management, but must never be thought of as “funding” government. To think that would be to indulge in an orthodox superstition.

This seems like a straightforward presentation of an idea that is admitted as true by most economists, even if they don't really want the general public to know about. Let me add back the elisions in bold:

As Wray put it, “The government does not ‘need’ the ‘public’s money’ in order to spend; rather the public needs the ‘government’s money’ in order to pay taxes. Once this is understood, it becomes clear that neither taxes nor government bonds ‘finance’ government spending.” You might be wondering where income earned on the job fits into all of this, but the world of production doesn’t play a large role in the theory.

But having tempted us into thinking that taxes were dispensable, Wray pulls a bait and switch. Since there is a risk that too much government spending would spark inflation, the government might need to cool things down, meaning create a recession — though Wray shies away from using the word — by raising taxes. Taxes, MMT holds, should be used as tools of economic management, but must never be thought of as “funding” government. To think that would be to indulge in an orthodox superstition.

I don't know what is more depressing, Henwood's shameless hatchet job, or how transparently he tries to manipulate his readers. Henwood seems to think that Jacobin readers are as gullible as Fox News viewers. I hope he's wrong.

It's not really useful to go into Henwood's article point by point; instead, I want to highlight a specific capitalist talking point Henwood reproduces, which implies that a popular government — i.e. a socialist government — cannot responsibly manage a fiat currency. The idea starts with the half-truth that MMT theorists think government creating money will magically cure all our problems. According to Henwood, MMT theorists claim, "A few computer keystrokes and everyone gets health insurance, student debt disappears, and we can save the climate too, without all that messy class conflict." The most obvious problem, of course, is inflation. MMT's answer is that taxation (fiscal policy), rather than central bank manipulation of the Federal Funds rate* (monetary policy), is the correct way to curb inflation. The question is, will taxes rather than interest rate manipulation work to control taxes?

*The rate banks charge each other to borrow reserves overnight.

On the one hand, Henwood appears to like taxes: "Taxation may not be full expropriation but it’s the next best thing in this fallen world. It is a form, however mild, of socialization — transforming private investment and consumption into public expenditures. [link original]" I concur, as do many notable MMT scholars. However, Henwood casually insults the "naïve belief in the curative powers of fiscal policy" (i.e. taxes). And Henwood claims the government is far too cumbersome to manage an economy with fiscal policy, "Anyone who’s watched Congress struggle with tax and spending policy has to wonder how anyone could believe that fiscal policy could be fine-tuned with requisite speed and precision." Henwood doesn't answer the question about who should fine-tune the economy. The central bank? The capitalist class? A socialist drum circle? I dunno.

The dead giveaway, however, is the considerable ink Henwood spends on the dreaded bugaboo of hyperinflation, invoking "[t]he extreme inflation of Weimar Germany in the 1920s." He also condemns the fiscal policies of many peripheral states, including Venezuela (!), Chile under Allende (!!), Venezuela, Turkey, and Greece. (Henwood has at least enough sophistication to talk about Greece before the euro.) Hyperinflation is one of the favorite monsters-under-the-bed unsophisticated capitalist propagandist love to invoke. Only the capitalist class can prevent the government from handing free stuff out to everyone. If the capitalist class does not impose the illusion of government fiscal discipline, a socialist government will eventually spend its way into hyperinflation and economic collapse.

Now very economist knows this illusion, this superstition, for what it is: the government does not have a real fiscal constraint. Paul Samuelson himself admits on camera (long before MMT) that the idea that taxes fund government is a superstition. A useful superstition, to be sure, but a superstition nonetheless.

An ordinary person such as myself has a fiscal constraint: I must obtain money through revenue (my paycheck) or borrowing (a bank loan) before I can spend it. Thus, I must persuade someone who already has the social permission to spend — my employer, my bank, or my friends — to give that permission to me before I can actually draw on the social product. The same is true for firms: they must persuade someone to buy their product (generating revenue), lend, or invest before they can spend money.

We like to pretend that the government is the same: it must obtain money by taxes (revenue) or by issuing bonds (borrowing) to obtain the money before it spends that money on public goods and services, and if the government cannot get the money, they cannot spend it. But this constraint is nothing more than pretense. The government can, if it chooses, spend money before it obtains it from others. For me, spending money I don't yet have is impossible; for a government, it might or might not be wise, but but it is possible.

Fiscal constraints differ from real constraints. If there are no cars available (real constraint), I can't get a car, no matter how much money I have. However, if I can't get money (fiscal constraint), I can't get a car, even if there are a thousand sitting on the lot. The trick is to get all these individual fiscal constraints to match up with the overall real constraints.

One point that MMT scholars make is that the present capitalist-managerialist system has already abandoned fiscal constraints in reality, but the system tries its best to bury this fact and make sure that deviations benefit the only capitalist class. One reason MMT scholars dig deep into the accounting is to try to uncover this buried truth. Again the capitalist story is clear: the government can deviate from its fiscal constraint for the benefit of the capitalist class without causing (too much) economic chaos, but do it for the people and bam! we're in Venezuela.

Abandoning even the pretense of a government fiscal constraint does make life more difficult. If we pretend that government has a fiscal constraint, it's easy to put an upper bound on how much the government should spend: only as much as it can convince the citizens to cough up in taxes or are willing to lend. If we drop the pretense, then the upper bound is much more difficult to determine. If we abandon the imaginary fiscal constraint, we have look at what the spending does rather than just ensuring expenditure does not exceed revenue. We want to spend — and spend appropriately — until we have full employment and are at potential output. One way of determining whether we're at full employment is by looking at inflation. If the price level starts rising, either stop spending or increase taxes. Henwood has a point: the above task is much easier said than done. Then again, so is the task of transforming a capitalist-managerialist country such as the United States to socialism.

Socialists face two main dangers. The first danger is that it might not be possible to run a socialist economy with anywhere near the level of comfort and convenience afforded by a capitalist economy. This danger is mitigated by the fact that capitalism-managerialism is lowering standards of living for all but the rich at an accelerating pace. The second danger is that capitalists, who will certainly fight back, will defeat socialism. We cannot avoid these dangers except to abandon the struggle. Socialism is not a Sure Thing: if we fight, we have to accept the possibility that we will fail. We can either admit defeat before we start, or bit the bullet and proceed despite the dangers. Fundamentally if someone believes a government not controlled by the capitalist class cannot effectively manage the economy, then they have no business calling themselves a socialist.

It would be nice to have an economy that doesn't use money, where we had so much that no reasonable person would want more than social product could afford them, where everyone contributed to the social product not to have more of the social product but out of a spirit of self-actualization, altruism, and civic duty. I don't think such an economy is utopian, or at least not impossibly utopian. But we're also not there today, and we won't get there tomorrow. We have a money-mediated market economy today, so we have to start pushing that economy towards our utopian ideal. And MMT is a good place to start pushing.

The objections against MMT are important, but not dispositive. MMT economists (Kelton, Wray, et al.) are not socialists, and MMT is thoroughly left-managerialist, not socialist. Just putting Kelton in charge of the Fed and Wray in charge of the Treasury will not usher in a socialist utopia. So what? Either MMT ideas are true or false; socialists should use the true ideas, regardless of the political orientation of their proponents. MMT scholars make errors, some grievous, and disagree on important points. So what? No one should propose making prophets of Kelton, Wray, etc. following to the letter the dictates of a nonexistent MMT scripture. We should not treat anyone (not even Marx!) as a transcendent authority; we should subject all ideas to ruthless critical scrutiny, not calumny. Like everything else, some of MMT is bullshit, but much of MMT really is true, admitted even by mainstream economists.

MMT is better-developed than Henwood would have us believe: MMT even has its own textbook. If MMT scholars are sometimes vague, well, the details really are complicated. How high should taxes be? How much inflation is acceptable? Where should we spend our money? The answer is the same as any economist would give: it depends. How fast should you go? It depends: are you in a car? a plane? A rocket ship to the Moon? Are you driving a Mercedes on the autobahn or a dynamite truck on an icy mountain road? The details are very different, but the framework, physics, is the same. MMT scholars are first and foremost proposing a framework for answering these questions.

The United States has no reason to worry much about hyperinflation. Wiemar Germany, Chile, Venezuela, Turkey, even Zimbabwe, are very different from use, and facile comparisons have no value. We do have the real capacity to make everything we want in the United States. We can and should worry about countries on the periphery, countries without our economic, social, and military privilege, but that's a different issue, and one we cannot even begin to address without first further advancing the cause of socialism.

The above notwithstanding, MMT gives us important weapons in the fight against capitalism. The first is that we do not need the money of the rich. We should definitely take their money, because they're the enemy, and money is their weapon, but we don't need it. As long as we hold on to the superstition that we need their money to fund socialism, we give the rich leverage: we must appease them, at least to some degree, to get their money. Why give that power away? Don't give the rich the power to hoard their money and crash the economy; instead, create our money to spend on what we need while we're clawing their money away. It's a subtle distinction, but one that is crucial to advancement of socialism.

The other big advantage of MMT is the job guarantee. Sure, a job guarantee (JG) could be implemented poorly, or the capitalist class could force it to be implemented poorly, but it can also be implemented well. The JG is straightforward, has theoretical and empirical support, and can act as a powerful automatic macroeconomic stabilizer. As Henwood admits, it begins to erode the most important tool to maintain capitalist power, the threat of the sack. The JG is not perfect, it does not solve every or even most of the problems facing the working class. But in this case, the perfect is the enemy of the good. The JG is not the end of the journey, but a step in the right direction.

MMT and hyperinflation

Greg Curtis gives us the third installment of his hysterical and almost completely uninformed condemnation of MMT: A Few Disastrous Examples of Government Overspending.

Curtis employs an all-too-common trope: Look at these bad events! They were really bad! And they were bad — the author asserts without evidence — because of this thing I don't like. Don't do that thing! (For rhetoric nerds, this is (at best) a cum hoc ergo propter hoc fallacy.)

For example, Hitler and Stalin killed a lot of people! That's bad! They were atheists! Therefore,tThey killed those people because they were atheists! Don't be atheists! Leaving aside whether they really did "wrongly" (whatever that means) kill a lot of people (Hitler probably, I'm not that sure about Stalin) and whether they actually were atheists (Stalin probably, Hitler not so much), how do we know that it was the atheism specifically that caused the killings? They both had mustaches; how do we know that wasn't the cause? Almost all (male) politicians in Murrica (fuck yeah!) are clean-shaven. Coincidence? Wake up, sheeple!

Curtis invokes Venezuela, Argentina, Brazil, Zimbabwe, and Weimar Germany! Look at those bad events! They all had something nebulous in common with MMT!

But should we trust his judgment? Let's look at a couple of specific claims. First,

Consider Venezuela, where staggering overspending by the Chávez regime has led to hyperinflation currently running at 10 million per cent per annum and a failed state.

Really? Chávez died in 2013. All right; we'll consider his successor, Nicolás Maduro Moros part of the "Chávez regime". More importantly, hyperinflation in Venezuela starts in 2012, fourteen years after Chávez took office in 1998 (and just a year or so before his death).

Curtis puts the blame for the Holocaust on MMT: in the Weimar republic,

Colossal money-​printing led, naturally, to hyperinflation: the mark, which had traded at 4.2 to the dollar in 1919, traded at 1 million to the dollar in 1923.

The resultant social instability hollowed out the political middle in the country, and power shifted to the radical extremes: the National Socialists on the right and the Communists on the left. By 1933 the Nazis had won and a few years later Germany launched World War II.

Sixty million people died in that war, including six million Jews, homosexuals and gypsies who were murdered by the Third Reich. When MMT goes bad, as it inevitably does, it goes very bad.

Again, was they hyperinflation the cause of Weimar republic's economic problems or a symptom of something else? It's not like Germany had to pay crushing war reparations or anything. Again more importantly, the Weimar hyperinflation was stabilized in the middle of the 1920s, some years before the Second Imperialist War. Perpaps Curtis is right: clearly there are no other systemic economic crises between the mid-1920s and 1933 </sarcasm>.

It is true that if a government only prints a metric assload of money, and literally does nothing else to manage the currency, then that country will experience hyperinflation. Doctor! It hurts when I do this! Well, don't do that.

Do MMT scholars advise that governments should just print a metric assload of money? No. Do they also advocate governments should do nothing else to manage the currency? Of course not. Curtis knows this, since he does admit that spending can be managed by (ugh!) raising taxes. But Curtis ain't buying: "[T]he notion that a Progressive government would raise taxes on the middle class merely to make up for its own foolishness is outright silly." Because, of course, no progressive government ever has raised taxes on the middle class </sarcasm>.

Look, the world has had a completely fiat global monetary system since 1971. Governments have been creating money since, well, the beginning of recorded history. It can certainly be done poorly: anything can be done poorly with catastrophic consequences. Furnaces catch fire or release carbon monoxide into the house, killing everyone. Airplanes crash. Automobiles crash. But we still heat our houses, fly around the globe, and drive to work. We need more than Curtis's hysterical, incompetent oversimplifications to keep us safe.

Old-fashioned economic religion

I think there is an element of truth in the view that the superstition that the budget must be balanced at all times, once it is debunked, takes away one of the bulwarks that every society must have against expenditure out of control. There must be discipline in the allocation of resources or you will have anarchistic chaos and inefficiency, and one of the functions of old-fashioned religion was to scare people by sometimes what might be regarded as myths into behaving in a way that long-run civilized life requires. We have taken away a belief in the intrinsic necessity of balancing the budget if not in every year, in every short period of time. — Paul Samuelson

John Maynard Keynes: Life, Ideas, Legacy, dir. Mark Blaug, 1988, Film.

Video clip here

Modern Monetary Stupidity

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.

A Marxist "critique" of MMT

I'm both a Marxist and a professional economist, and I very much like MMT. I think there are good Marxist arguments to be made against it, but in Marxism vs Modern Monetary Theory (MMT), Adam Booth does not offer one. Instead, Booth just repeats every American Enterprise Institute canard against MMT. It's no surprise that neoliberals and reactionaries just offer lies and bullshit to "critique" Modern Monetary Theory, but I expect a lot more — more perspicacious analysis and especially more basic intellectual honesty — from people who call themselves Marxists. Sadly, this expectation is honored yet again in the breach than the observance.

Headline MMT scholars (Kelton, Tcherneva, Wray, Mosler, Mitchell, etc.) are capitalists, not Marxists; of course they're not going to take a completely Marxist line. But Marxism, at least to me, is not about the "correct" ideological line; it's about a ruthless critique of everything existing. And MMT scholars are at least ruthlessly critiquing a central element of 21st century capitalist ideology, the private ownership of the financial system; they argue that we should socialize not just the losses but the gains from this central element. Does the MMT critique go far enough? Of course not. Does it go in the direction a good Marxist would think it should go? I say it does.

Booth uncritically reproduces the neoliberal critique of MMT, which relies almost entirely on outright lies about what MMT scholars actually say. The theme of this critique is that if we do not subject the production of money to market discipline, which requires private ownership of the production of money, then the economy will crash and burn. To reproduce and approve of the neoliberal critique first relies on outright falsehood. All truth is in favor of communism, or so I've been told; even if a lie seems convenient to the Marxist agenda, we should not use it. But the neoliberal critique is not even convenient to the Marxist agenda: if socializing the production of money is a Bad Idea, then why whould more socialization be a Better Idea?

Marx wrote on economics in the middle of the 19th century, when the gold standard was close to absolute canon in capitalist economics. It took repeated financial crises and the near-complete collapse of the Western international economy, but capitalists were finally forced by circumstances to abandon the gold standard partially with Bretton Woods and completely when Nixon ended convertibility in 1971. The core features of capitalism — exploitation, alienation, the falling rate of profit — are still there, but important technical details of how these features work today is almost, but not completely, unlike how they worked in the 1860s, when Marx was writing Capital. Marx understands the gold standard, but it is too much to expect even a person of his genius to anticipate how money would work a century after his death.

One of the persistent tropes of modern Marxist scholars is that because the gold standard was central to capitalism in Marx's era, it therefore must be an ineluctable essence of capitalism. Because we still do have a capitalist international economy, therefore there must be a gold standard lurking under there somewhere. I completely disagree with this trope. Money has a radically different character in 2019 than it did in 1867.

MMT theorists, I think, understand how money actually works today. And if we want to understand capitalism, we have to understand how money actually works, which means, I think, that honest, sincere, and curious Marxists should study MMT, and incorporate it, somehow, into the theoretical basis of action today. Make an honest critique of its truth and applicability. Argue that no matter how we slice and dice it, using money, be it commodity money, or fiat money, whether or not we pretend is a creature entirely of the market, to motivate economic behavior is not and never will be enough to deliver justice and prosperity.

But please, don't use lies intended to undermine the principle of socialism.

The Long Con: Mail-order conservatism

The Long Con
Mail-order conservatism
by Rick Perlstein

Mitt Romney is a liar. Of course, in some sense, all politicians, even all human beings, are liars. Romney’s lying went so over-the-top extravagant by this summer, though, that the New York Times editorial board did something probably unprecedented in their polite gray precincts: they used the L-word itself. “Mr. Romney’s entire campaign rests on a foundation of short, utterly false sound bites,” they editorialized. He repeats them “so often that millions of Americans believe them to be the truth.” “It is hard to challenge these lies with a well-reasoned-but- overlong speech,” they concluded; and how. Romney’s lying, in fact, was so richly variegated that it can serve as a sort of grammar of mendacity. . . .

Pundits—that is to say, the ones who aren’t stitched into their profession’s lunatic semiology, which holds that it’s unfair to call a Republican a liar unless you call a Democrat one too—have been hard at work analyzing what this all says about Mitt Romney’s character. And more power to them. But that’s not really my bag. . . . In my view, powerful men are but a means to the more profound end of sizing up the shifting allegiances on the demand side of our politics.

All righty, then: both the rank-and-file voters and the governing elites of a major American political party chose as their standardbearer a pathological liar. What does that reveal about them?

The Stupid! It Burns! (Abraham Lincoln edition)

In National Atheists Day R. K. Bentley chides atheists for being "brazen and outrageous liars" on the basis of this image:

Generally, though, you might want to do just a little, you know, research before you accuse people of being "brazen and outrageous liars." First, this image was created by one person, one unknown person, and its validity is controversial among atheists. A couple minutes with Google reveals that both PZ Myers and John Wilkins find fault with the image... and they did so three years ago. Isn't this sort of thing exactly what Christians criticize when atheists point to the moronic utterances of "fringe" fundamentalists? (Of course, atheists have a different point to make: We're not saying that because one Christian says something stupid, all Christians are therefore stupid. We simply observe that wow! there are a lot of really stupid Christians out there.)

The image might not be accurate (as Wilkins notes, the definition of atheism is a matter of controversy, especially as applied to uncertain cases), but the charge of a "brazen and outrageous" lie requires clear and unequivocal evidence that the assertion is so egregiously false that we can conclude only gross negligence or an intent to deceive. Bentley offers two pieces of evidence to support this charge.

First, Bentley offers Lincoln's call to prayer during the Civil War:

It is the duty of nations as well as of men to own their dependence upon the overruling power of God, and to confess their sins and transgressions in humble sorrow, yet with assured hope that genuine repentance will lead to mercy and pardon, and to recognize the sublime truth, announced in Holy Scripture, and proven by all history, that those nations only are blessed whose God is the Lord.

That seems like pretty hard-core Christianity. If Bentley's evidence stands, the image would indeed be almost as "brazen and outrageous" as naming the Pope as a prominent atheist.

However, a few minutes on Google and Wikipedia reveals some interesting facts. According to Wikipedia, Lincoln's religious beliefs were uncertain and largely private. He was not, as was Hume, unequivocally an atheist, but neither was he so unequivocally a Christian as the quotation would suggest. So where does the quotation come from? According to Judith Prince, the proclamation "was written by William H. Seward, Lincoln's Secretary of State, a very religious man who on more than one occasion talked Lincoln into giving religious proclamations that he had written for the President." Referring to a similar proclamation written by Seward, Prince quotes Lincoln as saying, "Oh, that is some of Seward's nonsense, and it pleases the fools." This speech cannot be evidence of anything other than that Lincoln was a politician, a profession whose members are not generally known for absolute sincerity in the public expression of their private beliefs. Bentley cannot plead ignorance; five minutes on Goggle and Wikipedia found the facts. It's not enough, I suppose, for Bentley to correctly conclude that Lincoln's religious beliefs are too obscure for us to unambiguously call him an atheist; Bentley has to stretch the truth even farther than does the image to make the charge of a "brazen and outrageous" lie.

Bentley at least quotes Franklin accurately (if incompletely); his characterization of Franklin's speech during the Constitutional Convention as a call to prayer is erroneous, but it is not a substantial error. But his quotation is incomplete and works, I think, against Christianity overall. The full quotation is:

I have lived, Sir, a long time, and the longer I live, the more convincing proofs I see of this truth that God Governs in the affairs of men. And if a sparrow cannot fall to the ground without his notice, is it probable that an empire can rise without his aid? We have been assured, Sir, in the sacred writings, that "except the Lord build the House they labour in vain that build it." I firmly believe this; and I also believe that without his concurring aid we shall succeed in this political building no better, than the Builders of Babel: We shall be divided by our little partial local interests; our projects will be confounded, and we ourselves shall become a reproach and bye word down to future ages. And what is worse, mankind may hereafter from this unfortunate instance, despair of establishing Governments by Human wisdom and leave it to chance, war and conquest. [emphasis added]

Franklin still fits if someone takes a broad view of atheism as the rejection of superstition and the confidence in human reason and wisdom. A broad view, even an over-broad and naive view, hardly rises to the level of "brazen and outrageous" lie.

Bentley goes on to to characterize the image as an appeal to authority: "It's a logical fallacy that attempts to say something like, 'This brilliant person believes this so therefore this is true.'" But Bentley is flat out putting words into the image creator's mouth. The image does not supply any major premise; it asserts only the minor premise, that some brilliant people had a particular view. The image would constitute a fallacy if and only if there were no major premise at all from which we could draw a sound conclusion. But of course there is such a major premise: if a brilliant person believes something, that belief is worthy of investigation, it is not patently and obviously false. So the charge of fallacy is unwarranted, and the charge of a specific fallacy can be supported only by attributing words to the image's creator that the creator did not actually say. Putting words in someone's mouth is, in technical, philosophical jargon, a brazen and outrageous lie.

We cannot draw any conclusions from this particular post other than its author is grossly incompetent at research and commits fallacies and errors far in excess of the image he criticizes; indeed we can conclude that he himself really is a "brazen and outrageous liar. But, as I have documented in this series as well as many other post, this kind of casual disregard for ordinary standards of scholarship and intellectual integrity — even the looser standards applicable to blogs and message boards — is endemic among advocates of Christianity. At some point we are entitled to connect the dots and conclude the intellectual bankruptcy of religion and belief in god.

Deconstructing the Ten "Cannots" of Political Economy

Allen Small offers reproduces the The Ten "Cannots" of Political Economy, created by Rev. William John Henry Boetcker in 1916:

You cannot bring about prosperity by discouraging thrift.
You cannot strengthen the weak by weakening the strong.
You cannot help small men by tearing down big men.
You cannot help the wage earner by tearing down the wage-payer.
You cannot further the brotherhood of mankind by encouraging class hatred.
You cannot help the poor by destroying the rich.
You cannot establish sound security on borrowed money.
You cannot keep out of trouble by spending more than you earn.
You cannot build character and courage by taking away man's initiative.
You cannot help man permanently by doing for them what they could do and should do for themselves.

Sadly, these mottos, accepted as "wisdom" by many, are either trivial or flat-out wrong, revealing an what is at best an extremely naive political philosophy, and at best a dishonest justification for the capitalist ruling class. (Of course, Allen Small — like almost every Libertarian and Randian — is as uncritically dogmatic as any Christian fundamentalist; he serves as a notable counter-example that to be a "true" atheist you must be a skeptic.)

These mottos exhibit a fundamental character of intellectually dishonesty: they are in one sense trivially and obviously true; in another sense they are at best highly controversial and at worst completely wrong. They are phrased so that the reader will assent in the context that they're obviously true, but uncritically universalize them to contexts where they're wrong.

You cannot bring about prosperity by discouraging thrift. In the sense of "thrift" as efficiency, this motto is simply trivial. In the sense of thrift as savings, with prosperity in antithetical sense of present consumption, this motto reveals an ignorance of economics that could be cured by reading the first chapter of any introductory economics textbook. Economics is about trade-offs, what you have to give up to get something else. We must continuously trade off between prosperity (present consumption) and thrift (present savings for future consumption). We must find the right balance between prosperity and thrift. Just as it makes no sense to immediately consume everything we produce with no thought at all for the future, it makes no sense to save everything we produce. In order to achieve a balance, there must be some negative feedback system in place: we need to discourage prosperity when it becomes — in some sense — excessive; we must also discourage thrift when it too becomes excessive.
This motto exists to tell you that you must always save your money so it can be used to the benefit of the capitalist ruling class; heaven forbid you should employ the fruits of the economy for your own comfort and convenience.

You cannot strengthen the weak by weakening the strong. You cannot help small men by tearing down big men. You cannot help the poor by destroying the rich. These mottos are identical in import. They're trivial as a "criticism" of a bullshit straw-man "Harrison Bergeron" egalitarianism, that no one, including Marx, ever considered endorsing. As substantive political principles, they're wrong. Strength and weakness (and big/rich and small/poor) — in a political context — are relative terms. You are "strong" (big) if and only if you can impose your will on the weak; you are "weak" (small) if and only if the strong can impose their will on you. The only way you can strengthen the weak is by weakening the strong. These mottos are only the most thinly disguised justifications for the privilege of any ruling class.

You cannot help the wage earner by tearing down the wage-payer. In the trivial sense, of course we cannot help the wage earner by literally destroying the capitalist industrial infrastructure. But again, in the trivial sense, this motto is directed against a straw man: only the most lunatic fringe of anarchists really favor just destroying industrial civilization, and they're too busy debating whether or not the use of wool unacceptably exploits sheep. In a more substantive sense, "tearing down" can taken to mean "acting against the interests of". And the interests of wage earners and wage payers are inexorably and irremediably in conflict. This conflict is not even a trade-off: in the long term, market forces necessarily push wages to the level of bare survival. In a larger, long-term sense we must eliminate the wage-earner/wage-payer contradiction, which is inherently exploitative.

You cannot further the brotherhood of mankind by encouraging class hatred. Ha! As if the capitalist ruling class had any interest in the "brotherhood of mankind"*! The "brotherhood of mankind" is absolutely incompatible with any kind of class structure. If the capitalist ruling class wishes to itself bring about a classless society, and they have the power to do so, there would be no class hatred. So long as they hold themselves up as a ruling class, inveighing against "class hatred" in the name of the "brotherhood of mankind" is nothing more than rank hypocrisy.

*No, I'm not at all happy with the gendered construction of this ideal, hence it remains in scare quotes for the entire paragraph.

You cannot establish sound security on borrowed money. This motto is not even trivially true in even the most narrow, individual circumstances, as will attest any person who has borrowed money to buy a house, get an education, or build a successful business.

This motto is absolutely incomprehensible to anyone who has studied economics, and it completely contradicts the first "prosperity/thrift" motto. First, all money is debt. If I have a thousand dollars in my bank account, society is indebted to me: I may at any time in the future demand a thousand dollars worth of goods and services from anyone in society, and she is obligated to give them to me; in return, she becomes the lender, and society then owes her a thousand dollars worth of goods and services.

More importantly, all "thrift" (savings) is debt. It doesn't matter if you call it a bank loan, a credit card, a bond, stock ownership or the inflation/deflation of money. What is produced (except for the trivial amount that is physically stored) must be used somehow by someone. If it is not consumed directly, it must be used to build new physical capital to increase future production. The person who forgoes consumption now to allow another to build a factory has at least some demand (although not necessarily the absolute and total demand entailed by capitalism) against the future production of that factory.

This motto is not even coherent in a capitalist economy: every capitalist, both individual capitalists and capitalist corporations constantly borrow money, at interest, from banks and individuals. Our entire industrial civilization is built on debt. Without debt — in some form — there is no investment, no industrial infrastructure, no modern civilization.

You cannot keep out of trouble by spending more than you earn. This motto is very similar to the one above, but it deserves special analysis. First of all, a billion ordinary working people have "stayed out of trouble" even though they have spent more than they have earned. Everyone who has bought a house spent — at the time they purchased the house — more than they earned. They go to work, they make the payments, they stay out of trouble. Everyone who has taken out a student loan to get an education has spent the time, effort, and labor of their professors, the administrators, the staff, and the builders of the physical campus, spends more than they have earned in the rational expectation that they will in the future earn more than they will spend.

In the long-term sense, most debts must be eventually repaid (but the system takes into account that some debts will simply be wasted; we do not (and perhaps cannot or should not) have a perfectly efficient economy), but in the long-term, global sense, it is impossible to spend more than one earns, in the sense of consuming more than is produced at the macroeconomic level.

There is another hidden assumption in this motto, that the wage "earner" actually earns exactly that which the wage payer chooses to pay him, and no more. It's possible (I suppose) that it might happen to be the case that a wage receiver actually does "deserve" (in some vague, metaphysical sense) that which she is paid, but the "laws" of economics most definitely do not guarantee such an outcome, even in the weaker sense that (truly) free markets do more-or-less guarantee that the price of a good or service matches the equilibrium price established by the supply and demand curves. And if by "earn" we mean "personally labor to produce", then it follows trivially that the rentier (capitalist) class does indeed spend more than they individually labor to produce; far from failing to "stay out of trouble", they actually rule the world.

You cannot build character and courage by taking away man's initiative. Again, true in a trivial sense. But what do we mean by "initiative"? Initiative to do what? I most certainly do want to take away "man's initiative" to murder, rape, steal my stuff, or to defraud me. I most certainly do want to take away "man's initiative" to create and maintain exploitative and oppressive economic relations. We want to reward initiative to engage in socially useful activities, and take away initiative to engage in socially destructive activities. What precisely constitutes "socially useful" and "socially destructive" activities is a matter of no small controversy, but cloaking this kind of decision-making under the banner of preserving "initiative" without regard to its ends goes beyond hypocrisy to prevarication.

You cannot help man permanently by doing for them what they could do and should do for themselves. But of course what should people do for themselves? Again, even the most cursory study of economics reveals the importance of trade, of people doing for each other what it is economically unproductive for them to do for themselves. It makes no sense for me to grow my own food, build my own house, design and produce my own computer. I cannot even begin to repay by my own efforts the labor of billions that have created the civilization and culture that I and every other living person now enjoys. Every one of us lives in a web of relationships not just with each other but with those long dead and not yet living. The Libertarian myth of "self-sufficiency" is nothing more than a thinly disguised version of "I've got mine, Jack."

I don't know who I'm more contemptuous of, Republicans or Libertarians. Both seek to maintain relations of exploitation and oppression. Both employ lies and bullshit as egregiously irrational as Christianity. Both end up believing their own lies and bullshit. But to the extent that there are degrees and layers of bullshit, Republican bullshit is at least more direct: Exploitation and oppression are intrinsically good, ordained by natural or divine rule. If the workers are exploited, so what? They deserve to be exploited. If they didn't deserve to be exploited, they would use their "initiative" to become part of the exploiters. There's something especially slimy, however, in the Libertarian effort to cloak exploitation and oppression in the rhetoric of liberty and freedom.

Conversation stopper

Much as I'd like to discuss abstruse metaphysical concepts with Only the Sangfroid, it's difficult to have a conversation when someone fails to observe the basic canons of intellectual honesty. Drawing unsupported inferences is one thing, but you cannot put words in someone's mouth, even with brackets. To do so is not just intellectual dishonesty, it's lying pure and simple.

In Sangy's latest missive, He quotes me as saying,

[W]ho — besides philosophers, theologians, pseudo-intellectuals such as Sangy, and other professional bullshit artists — would ever care [about truth]?

What I actually said was,

And even if the universe were as thick with causally inert objects as morons at the Creation Museum, who — besides philosophers, theologians, pseudo-intellectuals such as Sangy, and other professional bullshit artists — would ever care?

The only thing an honest person could put inside the brackets would be "causally inert objects". To place one's own interpretation of another's remarks, even if that interpretation were justified (which it's not), is simply lying.

All I can do in this situation is prove he lied and call him a liar. No further conversation has even the slightest chance of being productive.

Skepticism is not equal to atheism

First, I want to make the context of this discussion absolutely clear. This controversy is not about the members of some specific organization such as JREF or CFI debating how best to focus their own organization, their own reputation, and their own time, money and effort. If some organization wants to focus skeptical inquiry on evolution, or global warming, or faith healing, then groovy. Knock yourselves out. I might or might not actually join you, but I'll be at least cheering from the sidelines. I have never seen any atheist demand that any skeptical or scientific organization of which they are not a member stop focusing on whatever they focus on and focus on religion.

This controversy is about an organization, Skepticon, deciding to use their own organization, reputation, time, money and effort, to skeptically inquire into religion. And some so-called skeptics have howled in protest: How dare you mention skepticism and atheism in the same breath! They have nothing to do with one another.

The controversy apparently starts with Jeff Wagg's post, Are Atheists Delusional? Thoughts on Skepticon3. Wagg commits a logical fallacy so egregious that he is saved from charges of mendacity only by making the fallacy explicit; we are forced to conclude, therefore, that Wagg is either completely stupid or fails to understand basic logic. Wagg's reasoning is as follows:

1. Skepticon organizer J.T. Eberhard says, "[I]t is the opinion of most of our organizers that skepticism leads directly to some brand of atheism/metaphysical naturalism."
2. Wagg concludes, "[T]he organizers of Skepticon believe that Skepticism = Atheism
3. But skepticism is not equal to atheism; one could be an atheist without being a skeptic

Wagg's intellectual incompetence is truly breathtaking. Eberhard's claim that skepticism leads directly to atheism claims an asymmetric, non-commutative, non-identity relationship (a leads to b does not entail that b leads to a or that a and b are the same thing). Equality is a symmetric, commutative, identity relationship (a=b entails that b=a; a and b are the same thing). Wagg is changing Eberhard's claim. This is a tactic more characteristic of philosophers, theologians, politicians, and advertising executives, not skeptics and scientists.

Intellectuals have to take intellectual honesty and integrity seriously. I'm just a freshman in community college, with very low standards. If I put a howler like that in a paper, any of my professors would reject the paper. If I didn't actually include the quotation, I would be kicked out of school for academic malfeasance. Just putting out such a dishonest interpretation is at least irresponsible; as we have seen, commenters will quote the interpretation without the source. Wagg's defenders, when repeating the "Skepticism = Atheism" claim without including the original quotation are actually lying, and Wagg has at least irresponsibly facilitated this lie.

Wagg is correct on his second point: Skepticism is not equal to atheism. But so what? Skepticism equals only skepticism; there is no specific position at all about this particular world — evolution, vaccinations, global warming, medicine, etc. — that only a skeptic can hold. To single out atheism as being somehow different because an atheist is not by definition a skeptic is an obvious fallacy of special pleading. To dishonestly change a claim to hide the fallacy just compounds the incompetence and irresponsibility.

Atheist such as myself typically agree with Eberhard: We claim the relationship between skepticism and atheism is that skepticism leads to atheism. Skepticism leads to atheism in precisely the same sense that skepticism leads to evolution, anthropogenic global warming, Special and General Relativity, the germ theory of disease, aerodynamics, a 13 billion-year-old universe and a host of other scientific conclusions about the world. We have the evidence we have, we have the skeptical method of inquiry, and applying that method to the evidence available leads inexorably to particular positions. Among those positions is that no god exists, for conceptions of god held by billions of people.

Now this claim might well be mistaken. I welcome an honest argument on the merits of the claim. I'd like to see an argument stronger than trivial psychological compatibility. I'd like to see an argument stronger than that we atheists are hurting some cause by alienating the religious. And I definitely do not want a dishonest, irresponsible straw man argument escaping mendacity to incompetence only by explication.

Since I'd welcome an argument against, it behooves me to make an argument for the claim.

First, let me provisionally define "narrow skepticism" as the position that we should determine the truth of testable claims about reality by testing them. In this sense, religious believers make many testable claims about reality: statues crying blood, faith healing, miracles, people rising from the dead, and so forth. On skeptical inquiry, one must determine that these testable claims are false. If one is like billions of religious believers, who are religious because they believe these testable and testably false claims about reality are true, skepticism does lead one to abandon this sort of religion.

What about non-testable claims about reality? Perhaps skeptics should not discuss these topics in the framework of skepticism; they certainly do not fit "narrow skepticism" as defined above. There are two big problems with this position, however. First, any skeptical conclusion can be denied in a non-testable manner. Don't like evolution? Propose the omphalos hypothesis or a non-testable version of Intelligent Design. Don't like anthropogenic global warming? Simply propose some as-yet-unknown natural mechanism; scientists can't exclude everything. More importantly, skepticism really is a method of thinking, and skeptics really are charged with promoting this method. Integral to this method must be not just testing testable claims, but also thinking about the world in terms of testable claims. To simply remain silent about non-testable claims about the world is to allow people to abandon skepticism as a method by thinking about the world in exclusively non-testable ways.

The religious make many non-testable claims about the world, chiefly in the area of ethics and morality. They claim it is is a truth about the world, about which people can have mistaken opinions, that gay people should not have sex. It is a truth about the world that a woman — at least a dirty slut who fucks — is a slave to her uterus. It is a truth about the world that those in authority deserve unquestioning obedience, because all authority is endorsed by God. It is a truth about the world that hurricanes, earthquakes, tidal waves, epidemics are God's judgment for sin, and the victims of these disasters deserve their fate. If we take a methodological view of skepticism, if we commit to think about the world in testable ways, then these claims must fall. Skeptical inquiry into these beliefs will inexorably lead a religious person to abandon that sort of religion.

What about non-testable metaphysical claims, claim not about the world, but about philosophy? When you start trying to talk about "God" at this level, you're either not making any sense whatsoever (the string of words, "God is the ground of all being" is just nonsense) or you're already an atheist. As Greg Egan observes:

As Paul Davies has said, most Christian theologians have retreated from all the things that their religion supposedly asserts; they take a much more "modern" view than the average believer. But by the time you've "modernised" something like Christianity - starting off with "Genesis was all just poetry" and ending up with "Well, of course there's no such thing as a personal God" - there's not much point pretending that there's anything religious left. You might as well come clean and admit that you're an atheist with certain values, which are historical, cultural, biological, and personal in origin, and have nothing to do with anything called God.

So just thinking about "God" metaphysically — precisely because one adheres to skepticism about the world — leads inexorably to atheism. Once you've taken God out of the world, you've taken God out.

Skepticism does lead to atheism. Religion — at every level — is a valid subject for skeptical inquiry. The "skeptical" critics of atheism are not "protecting" skepticism, they're diluting it, presumably because they want people to accept the conclusions from skeptical inquiry without demanding they commit to skeptical methodology. And, as we've seen, "skeptical" critics of atheism are only one small step above the utter intellectual dishonesty of Young Earth Creationists.

Non-skeptical atheists

Our story so far...

Jim Lippard complains about "blurring the lines" between atheism and skepticism.

I reply, harshly, to Lippard's deficiencies.

Lippard comments in his own defense (reproduced in full):

I call false charge of fallacy on your "category mistake" claim.

You write: "The implication appears to be that atheism is about holding a particular position without regard to using the best method to find a reliable answer to questions about the existence of God."

That's correct--what makes one an atheist is not believing in gods, regardless of how one came to that position. You go on to talk about *skeptical* atheists, and I agree that there are such--I'm one of them.

The rest of your post is a straw man--I've not told anyone to shut up. My point is simply that there is a distinction between skepticism and atheism, and that it can cause confusion to blur that distinction.

I also pointed out on Twitter on Nov. 23 (https://twitter.com/#!/lippard/status/7074762350133248): "Seems to me a better argument than I've heard for the name "Skepticon" would be: we want to promote *skeptical* atheism, not just atheism." and (https://twitter.com/#!/lippard/status/7074762350133248) "Did I just miss it, or is that an argument it hasn't occurred to any "Skepticon" defenders to make? And is it even the case?"

First, I don't follow Twitter; I'm not responsible for knowing what anyone's said on that channel.

But Lippard's defense is weak. Of course it is true that "what makes one an atheist is not believing in gods, regardless of how one came to that position." And it is equally true that what makes one a believer in evolution is, well, believing in evolution, regardless of how one came to that position. The same is true of any position. Furthermore, "can" is a pure weasel word: Anything can cause confusion. It can be just as "confusing" to blur the distinction between belief in evolution (perhaps because the Pope has (to some extent) endorsed evolution) and how one came to believe evolution is true. If Lippard is not speaking entirely vacuously, we must read him as saying that people actually are causing confusion.

But who is doing so? Where are the non-skeptical atheists who are blurring the lines between skepticism and a particular belief? I read Planet Atheism every day; I have a standing query in my reader for blog posts containing "atheist" or "atheism"; and I frankly can't remember the last time I saw anyone endorsing atheism for reasons incompatible with or confusing skeptical methodology.

Lippard doesn't just say that he himself happens to be a skeptical atheist, but that there are skeptical theists: In his original post, he says, "The organized skeptical groups with decades of history... have been represented by skeptics of a variety of religious views in events of lasting consequence. [emphasis added]" The implication therefore is that atheism is not a consequence of skeptical thinking; if it's not a consequence of skeptical thinking, it must be an a priori belief. The only rebuttal to this charge is to say that atheism is a consequence of skepticism, but we should ignore some "skeptics'" theism because of their contributions. Lippard is on the horns of a dilemma: either address the arguments that atheism really is a consequence of skepticism, or admit that some beliefs deserve an exemption from skeptical inquiry. And if religion deserves an exemption, why not evolution? Or vaccination? Or homeopathy?

Remember, this whole "controversy" starts with J. T. Eberhard and Skepticon organizing a conference to presumably subject religious claims to skeptical scrutiny. Lippard (as well as other critics) are not members of that organization and are not protecting its interests. They appear to want to protect skepticism itself from atheism. As one of the original critics claims, atheism is "not skepticism. The pro-atheist cause is an entirely different endeavor" from the skeptical cause; the only similarity is in an overlapping community. And he says this despite publishing Eberhard's clear and unambiguous assertion that "it is the opinion of most of our organizers that skepticism leads directly to some brand of atheism/metaphysical naturalism... [emphasis added]"

If Lippard wants to make the argument that theism is actually philosophically (and not just psychologically) compatible with skepticism, let him make that argument; I'll listen with an open mind, and argue the issue on its merits. But he has to actually make the argument, not simply uncritically and unskeptically make the assertion and condemn atheists for failing to adhere to his skeptical dogma.

Until then, he can kiss my hairy white skeptical atheist ass.