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The Fight for the NHS/MMT economics

matthewr said:
At the start of this I will point out that I have no interest in discussing MMT mostly because, as I have already stated, I have been around this loop a few times over the years and it always seems to get bogged down in the very loose semantics. Semantics which seem to stop it from being a useful discussion outside of academic circles and instead lead to bad natured squabbling.

In the wider public sphere we always seem to end up with it either saying not very much beyond Keynes who famously said "Anything we can do, we can afford" or saying something that mostly just serves to provided the largest possible attack surface for those we might describe using the N word.

That Keynes quote, I note, was from about 60 years ago because as is often pointed out the thing that is modern in MMT is the money not the theory and the "Magic Money Tree" is not some radical, barely supported theory but (broadly) accepted as how modern economies work for about 60 or 70 years. There are people who don't accept these ideas but invariably their bad faith basis is hidden under a wafer thin veneer.

Anyway, all I have for you is some links which I hope provide some good reading on this and the wider subject.

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First, this is a few years old now but remains a good introduction to MMT and places it in the context of the various bits of earlier economics from which it sprung and explains these in easy to understand English -- and one of MMT's biggest problems ISTM is that there is nobody who can advocate for it without either confusing everyone or making it sound like magic:

https://creditwritedowns.com/2019/03/mmt-for-dummies.html

Adam Tooze is really a historian rather than an economist, but he is an excellent read on many subjects and his views on MMT are well worth reading. As ever he will challenge your thinking and provide insight no matter what your previous views on the subject.

Here he is on Keynes and his relevance given how COVID changed everything. Like everyone he is selling his book but generally his books are worth reading.

https://adamtooze.substack.com/p/chartbook-on-shutdown-keynes-and

And here he is on Krugman when reviewing Krugman's book. He's right, of course, to be critical of Krugman although I do think Krugman is important for his public advocacy of Keynesian ideas in the wake of both the 2008 GFC and Covid.

https://www.lrb.co.uk/the-paper/v43/n08/adam-tooze/the-gatekeeper

He also did write a book on COVID which Krugman reviews here:

https://www.nybooks.com/articles/2022/03/10/covids-economic-mutations-krugman/ (soft paywall)

The reason I mention COVID and the GFC of course is because if anything resets thinking about spending and deficits and all that it's the real world experiments we have had in the face of unprecedented disasters. I note we have managed to deal with these events and before that WWII without also needing to persuade everyone to accept MMT.

And if you really want to get into the weeds, Tooze also has a fascinating article on Putin and MMT here:

https://adamtooze.substack.com/p/chartbook-91-what-if-putins-war-regime

From a leftist perspective Dissent magazine had a three part discussion on these issues here:

https://www.dissentmagazine.org/article/the-tax-trap
https://www.dissentmagazine.org/online_articles/the-mmt-trap-a-response-to-daniel-wortel-london
https://www.dissentmagazine.org/online_articles/a-reply-to-aashna-desai

Finally, an argument against MMT from James Meadway (adviser to John McDonnell) which gets, perhaps, closest to my views. He argues (broadly and in part) that the difficult part is not the economics but the politics and MMT makes the politics a lot harder for at best a marginal economic gain.

https://tribunemag.co.uk/2019/06/against-modern-monetary-theory

Again I stress none of this is meant to be me arguing a case as a much as providing some reading for anyone who wants to progress their understanding and clarify their views on these issues.
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Thank you. A lot to read there.

I’ve started at the bottom with James Meadway and there is much to pick at. For a start he mentions the usual line about inflation but doesn’t mention the Job Guarantee which is central.

I’ll work my way up. Slowly
 
matthewr said:
...one of MMT's biggest problems ISTM is that there is nobody who can advocate for it without either confusing everyone or making it sound like magic
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I'm not sure where the confusion comes from, personally.

What's interesting about many critiques of MMT is that they pick something that 'feels' wrong to the writer, and use it to try to discredit everything MMT says.

One instance I remember reading was an FT article by John Kay in 2012. I like John Kay on the whole, but this article saw him attempt to discredit MMT's assertion that tax drives acceptance of a currency. He argued that if the Scottish government wanted payment of tax denominated in cows, people would pay in cows. But people would still use pounds/dollars in shops. There is some truth in what Kay says: acceptance of currency requires social proof, or social acceptance norms, but his argument doesn't get to the root of how the pounds/dollars came to be accepted in the first place. What took the risk away from accepting pounds/dollars when the currency was new? How did social acceptance become embedded? In short, his explanation explained nothing.

He even suggested that payment in cows would create a market in 'tradeable highland cattle certificates'. But he didn't ask: Why, if RBS issued securities in cows, would anyone want them, except for the fact that the Scottish government wanted payment in cows? Because the answer is probably: because the government demands payment of tax in cows. So, he almost got to the point of accidentally proving the MMT argument right. But in his mind, he had 'debunked' MMT.

Frankly, a lot of the 'confusion' I see is a bit like this: MMT overturns someone's way of thinking about the world, therefore it must be wrong.
 
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crimsondonkey said:
Is there a simple beginners guide to MMT that you would recommend, that is accessible and puts across the concepts in a reasonably simple understandable way? Apologies if this has been already signposted in these pages.
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Stephanie Kelton, The Deficit Myth. Even I understood most of it!
 
crimsondonkey said:
Is there a simple beginners guide to MMT that you would recommend, that is accessible and puts across the concepts in a reasonably simple understandable way? Apologies if this has been already signposted in these pages.
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Also the GIMMS website is good as it is broken down into different articles which start off with a beginners guide
 
Translation: You don’t have to sell Treasury bonds at all. Just print money, credit accounts directly. That’s a pretty controversial view. And I think this is the one that is most pilloried.
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Narrative tip to MMT newcomers; any use of “printing money” is clear indication of an agenda and should be filed under other trigger words like “maxing out the national credit card”, and “loading debt onto our children and grandchildren”
 
laughingboy said:
Frankly, a lot of the 'confusion' I see is a bit like this: MMT overturns someone's way of thinking about the world, therefore it must be wrong.
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Although most of the heavy lifting was, I think, done by Keynes. And most of our problems seem to be everyone is still stuck on the household model of the economy despite this being 60 years out of date.
 
laughingboy said:
I'm not sure where the confusion comes from, personally.

What's interesting about many critiques of MMT are that they pick something that 'feels' wrong to the writer, and use it to try to discredit everything MMT says.

One instance I remember reading was an FT article by John Kay in 2012. I like John Kay on the whole, but this article saw him attempt to discredit MMT's assertion that tax drives acceptance of a currency. He argued that if the Scottish government wanted payment of tax denominated in cows, people would pay in cows. But people would still use pounds/dollars in shops. There is some truth in what Kay says: acceptance of currency requires social proof, or social acceptance norms, but his argument doesn't get to the root of how the pounds/dollars came to be accepted in the first place. What took the risk away from accepting pounds/dollars when the currency was new? How did social acceptance become embedded? In short, his explanation explained nothing.

He even suggested that payment in cows would create a market in 'tradeable highland cattle certificates'. But he didn't ask: Why, if RBS issued securities in cows, would anyone want them, except for the fact that the Scottish government wanted payment in cows? Because the answer is probably: because the government demands payment of tax in cows. So, he almost got to the point of accidentally proving the MMT argument right. But in his mind, he had 'debunked' MMT.

Frankly, a lot of the 'confusion' I see is a bit like this: MMT overturns someone's way of thinking about the world, therefore it must be wrong.
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I must start off by saying that I am not in anyway having a go a @matthewr but I’d do think that those article are some way away from being impartial, they clearly have an axe to grind.

Of course, I too have an axe to grind, but it is out there in the open. You know which way my axe swings!

I don’t have the knowledge or understanding of @Le Baron, but I can recognise certain trigger words like “printing money” as a trope to chat about “inflation”. “The word “inflation” it self is not a trope, and should not be dismissed, it needs to be taken seriously. But if you see the words “inflation” in the same sentence as “printing money”, then please, be suspicious. If you also see words like “as MMT says…”, “Weimar” and “Venezuela”, then please, remove all doubt.

However, the big give away is the translation of Kelton into “printing money” in the first place. I have read Stephanie Kelton more than once, and that is an absolute inversion of my understanding of what she is saying.

So please, be suspicious of “MMT says….” and if someone says “Even Stephanie Kelton says….” please don’t take them at their word, go and read Stephaine Kelton yourself. It is easy to understand on first reading, it does not have numbers, and is available from all good bookstores and here for only £4.99.

True enlightenment is cheap, and not far away……
 
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crimsondonkey said:
Is there a simple beginners guide to MMT that you would recommend, that is accessible and puts across the concepts in a reasonably simple understandable way? Apologies if this has been already signposted in these pages.
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Klassik generally recommends two videos by American professors delivering speeches to British audiences. Perhaps it's not necessary to watch both, but it doesn't hurt if one has enough time to devote to the topic.

The first is a presentation by Stephanie Kelton. Her book has been mentioned before:


The other is by Fadhel Kaboub. Kaboub specializes in MMT and how it can be used to benefit the developing world, but this is a more general introduction to MMT and the job guarantee. Kaboub is a good speaker and so it might be worth seeking out his other speeches as well.


The Mitchell, Wray, and Watts textbook on Macroeconomics is a good introduction, but unfortunately it is not an open textbook as it should be. Bill Mitchell must need funding to pay for his activities while he works from home. ;)
 
Klassik said:
Klassik generally recommends two videos by American professors delivering speeches to British audiences. Perhaps it's not necessary to watch both, but it doesn't hurt if one has enough time to devote to the topic.

The first is a presentation by Stephanie Kelton. Her book has been mentioned before:


The other is by Fadhel Kaboub. Kaboub specializes in MMT and how it can be used to benefit the developing world, but this is a more general introduction to MMT and the job guarantee. Kaboub is a good speaker and so it might be worth seeking out his other speeches as well.


The Mitchell, Wray, and Watts textbook on Macroeconomics is a good introduction, but unfortunately it is not an open textbook as it should be. Bill Mitchell must need funding to pay for his activities while he works from home. ;)
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I love Fadhel Kaboub.

And I want to have Stephanie Kelton’s babies.

What a strange world MMT is?
 
Hopefully everyone one now left on this thread is at least curious about where the logic that as ‘our government is it’s own currency issuer, it cannot therefore run out of the thing it issues’, leads us.

Monetarism is an idea that contradicts MMT at the very start of that observation by saying that government spending comes from tax.

Monetarism maintains that all spending is constrained by the tax intake. It maintains that it would love to spend money on making the NHS work, but cannot because there just isn’t enough money. Therefore to spend more would be irresponsible/we’re all in this together/printing money/inflation/Magic Money Tree/Far Left extremist ideology, any one who disagrees is a communist/there is no alternative. Any normal person will follow monetarist logic and vote Conservative.

You know it makes sense.

But there is an alternative, and it isn’t far left, it isn’t an ideology, it isn’t inflationary, or printing money, or a type of flora, or any other rude word.

It is just a logical conclusion from the observation that our government issues it’s own money. It has no need for our in order to spend on the NHS

Spending where there is a need, like training nurses because there is a shortage of nurses, or developing a Green infrastructure, is not (within certain constraints other than tax, blah, blah, blah) inflationary. It is just a very good idea.

Acknowledging the logic that flows from an uncontroversial observation, will not cause anything detrimental. Political opposition could destabilise the economy, but the logic of an observable fact, on its own, will not.

MMT is the alternative to Monetarism.

Bearing in mind the hostility directed at MMT supporters here on pfm recently, and two MMT supporters banned, I was rather expecting a significant counterbalancing of passion in support of the virtues and singular necessity of Monetarism on other threads. But the silence is ominous.

Monetarism says that there is no alternative to starving nurses to death. There is at least one that has been consistently thought out. There may be others
 
How do you get 12 different answers to the same economic question?
Ask 11 eleven economists.
 
ks.234 said:
What was the question?
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'The same question', so it could be any number of things, such as:

'Will there be a recession?'

'If there is a recession, how long will it last, and how bad will it be?'

'Is it better to raise or lower interest rates?'

'Will employment levels rise or fall?'

Which reminds me of the anecdote about Lord Melbourne, the Whig Prime Minister. As he was about to go into Parliament to make an announcement about the Corn Laws, he said to his Cabinet colleagues: 'Now, gentlemen, is it to raise or lower the price of corn? It matters little which, only mind, we must all say the same thing.'
 
Joe Hutch said:
'The same question', so it could be any number of things, such as:

'Will there be a recession?'

'If there is a recession, how long will it last, and how bad will it be?'

'Is it better to raise or lower interest rates?'

'Will employment levels rise or fall?'

Which reminds me of the anecdote about Lord Melbourne, the Whig Prime Minister. As he was about to go into Parliament to make an announcement about the Corn Laws, he said to his Cabinet colleagues: 'Now, gentlemen, is it to raise or lower the price of corn? It matters little which, only mind, we must all say the same thing.'
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None of your questions have anything to do with MMT. Maybe you’re on the wrong thread. There is a Monetarist thread specifically aimed at most of the questions you ask.
 
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