Skip to content

To accuse someone of libel is in itself libel

So I’ll be letting the libel pass by.

The libel itself?

By extension, a snake oil salesman is someone who knowingly sells fraudulent goods or who is themselves a fraud, quack, charlatan, or the like.

Hmm, Ritchie? Economics? Well, umm….???? And to still any doubts:

So let’s now look at the economics on offer from Paddy. In doing so I can’t help but start with a quote from a Danny Blanchflower paper from 2012 in which he in turn quoted Oliver Blanchard’s 2008 description of the standard macroeconomist’ approach to an issue (Blanchard is now chief economist at the IMF):

A macroeconomic article today often follows strict, haiku-like, rules: It starts from a general equilibrium structure, in which individuals maximize the expected present value of utility, firms maximize their value, and markets clear. Then, it introduces a twist, be it an imperfection or the closing of a particular set of markets, and works out the general equilibrium implications. It then performs a numerical simulation, based on calibration, showing that the model performs well. It ends with a welfare assessment.

And that is, almost exactly, what Paddy Carter does. I will come back to all his other assumptions in a minute. What is most telling to me about Carter’s whole approach is that is his whole criticism of PQE is based on the logic of this paragraph:

And here’s why People’s QE (PQE) is snake oil. So long as the BoE is still targeting inflation, it will still be pushing and pulling money in and out of the system, as required to meet demand for money at the interest rate it has set. If the BoE is still targeting inflation, then whatever money PQE puts into the economy on one hand, the BoE is going to be taking out with the other. Or, if the BoE happens not to take the money out, that implies it would have been putting it in, anyway. And that means that over the long run the rate of seignorage, or the extent to which the government is able to spend without borrowing, is not affected by PQE.

For the sake of doubt, let me deconstruct that. What Paddy Carter is assuming is that at the moment PQE is introduced the economy is in equilibrium (the first Blanchard condition). In other words, Carter assumes PQE would be introduced into what he thinks is an already perfect world – because that’s what he has apparently taught piles of students is what exists in the macroeconomic world. The consequence is that he assumes that the only need the Bank of England would have if PQE was introduced would be to immediately cancel the consequence of it because the world was perfect before PQE happened. This is the fulfilment of the second Blanchard condition: introducing PQE is to create an imperfection in an already perfect world. And the third Blanchard condition requires that the imperfection must be addressed, which is why the impact of the PQE funding must be cancelled by pulling it out of the economy as fast as possible in Carter’s opinion by selling bonds. And then in the final sentence we get the fourth and fifth Blanchard conditions combined: there is no impact on ability to spend without borrowing as a consequence and so no net welfare change, it is claimed.

Err, no, Paddy doesn’t assume equilibrium and he also doesn’t assume that PQE is an imperfection.

It’s not looking good for the retired accountant versus the PhD in economics really…..

And now let’s explore why that is total nonsense.

First, we are not in a state of general equilibrium. We are very far from it. We have (to list just a few of the reasons why this assumption is not true):

Low productivity
Limited investment by business
A chromic shortage of necessary social infrastructure like affordable housing
A market unable to price minor issues like climate change and the funding needed as a consequence
An impending exogenous shock in the form of China

Depending upon who you want to talk to 1) might or might not be a condition of GE. But items 2-6 have absolutely nothing to do with it at all.

Third, monetary policy has not worked for more than six years because we are at the lower bound of interest rates and there is little sign that is going to change.

His last post but two or three was all about how QE, which is monetary policy, has worked.

So, let’s summarise this. First, Carter’s macroeconomics is a proof existing solely in its own fantasy world that in turn exists solely in his imagination and that of his fellow so-inclined macroeconomists.

Err, yeah……

19 thoughts on “To accuse someone of libel is in itself libel”

  1. “Chromic shortage … housing”? Well, yes. Balamory aside, it isn’t common UK practice to colourfully paint the outside of your house.

    A bit of render to hide the appalling brickwork is about the most you get.

  2. bloke (not) in spain

    I wondered about that.
    A lack of colour choice amongst aerosols for graffi-ing bus shelters is another problem. It’s all primaries & metallics. None of the subtle shades needed for truly artistic tagging.

  3. bloke (not) in spain

    The amount of miss-types the clown spews out is revealing, isn’t it?
    Yeah. Commentators here aren’t exactly perfect. Me, the least. But bashing out a few words on a netbook on the corner of a café table isn’t sitting in a converted garage* with a mission to educate the world with one’s wisdom. Does he never read what he’s written.

    *Sort of a low rent Oracle at Delphi, isn’t it? Light on the marble pillars & sacred grove. Strong on plastic storage boxes & the compost heap. Wonder what the travelers from far flung realms in search of knowledge, traffic’s like. S’pose there’s always the tarmacing Pikeys & Romanians.with trays of J-cloths.

  4. @Ben Squirrell 3:22pm – The amount of sarcasm and mocking that just seems to go over his head makes me think Aspie, Not that I would want to cause misery to anyone with Asperger’s by associating them with Richard Murphy.

  5. “it isn’t common UK practice to colourfully paint the outside of your house.”

    I’m thinking you haven’t visited Suffolk…;-)

  6. ‘if there is something I have learned from Jeremy Corbyn over the last few weeks it is ‘don’t do personal’.

  7. But he doesn’t just do personal.

    He just insults entire professions: economists, actuaries, lawyers, other accountants.

  8. @ magnusw
    For a variety of reasons I have encountered a significant number of young people with asperger’s syndrome. Not a single one of them spews out toxic mush like Murphy.
    One of things about those on the autistic spectrum is that they lack malice.

  9. Getting toxic on Twitter.
    Murphy asking Paddy Caretr to apologise, Blanchflower deriding Tony Yates competence and credibility, Murphy insisting he and B called it right (like predicted unemployment?).
    Very personal and no pretence at avoiding the personal.

  10. “I am more than ready for the argument. What annoys me is those who make it personal. Which is why Frances Coppola has made her last comment here for a long time to come”

    It looks like he’s banned Frances Coppola from commenting on his blog.

  11. John
    I would love to see that, but sadly I am blocked by both Mr Murphy and Mr Blanchflower.
    There has been a terrific punch-up between Ritchie and Frances Coppola on the TRUK blog. The insult “Worstall” has been thrown.

  12. The punch up has spilled over into Twitter. She seems very unlikely to want to comment on his blog in any event
    Seems strange approach if he wants allies for PQE. Best to deal with arguments in a rational way? Not do ad hominem and talk of libel and ask for apology.

  13. She was not best pleased with my Tweet that to call Ritchie’s output “snake oil” probably libels rattlesnakes.

  14. Bloke in Costa Rica

    Hanlon’s Razor is useless with Murphy. On the one hand, it is obvious that he is deeply, irremediably stupid. On the other hand, he is so unpleasant and vituperative in his response to criticism that he appears malevolent. Stupidity and malice appear to be present in equal quantities. There is a third element possibly in play: he might actually be unhinged.

  15. Bloke not in Cymru

    Having followed on from here and read both Frances blog and murphys blog Its pretty easy to know which one came across as knowledgable, reasonable and promoting open debate and which one for lack of a better word came across as a complete delusional twat.
    Murphy is beyond reasoning with at this point it seems, though I heartily applaud the efforts of those who are trying to make sure his glib message cannot hide in the shadows and is exposed.

Leave a Reply

Your email address will not be published. Required fields are marked *