The way in which MMT differs from most economics is that much of what it says can be tested against observable behaviour. In economics that is rare.
Like people don’t move because of tax rates. Or change their working habits because of tax rates. Or…..well, you get the picture. And that’s in the introduction.
MMT assumes that the economy is comprised of four parts, although one has an important
subdivision within it.
Firstly, there are people and the mechanisms (such as companies) that they use to pursue
productive economic activity from which consumption follows. This is the private sector within a
jurisdiction, in all its forms.
Secondly, there is government. This is the organisation that has been granted exclusive power
by the people living within a geographic area to establish law, maintain security and deliver
services to meet need within that domain.
So, err, private companies, organisations and people do not deliver services which meet need? If he’s going this wrong already do we need to go further?
The other reason for taxing is to require that the currency that the government has created
is routinely used for transacting within the economy for which that government is
responsible. This is required to achieve control of its macroeconomy. Imposing taxes that
are only legally capable of being paid using the currency that the government creates
achieves this goal. That is because if the tax due on a transaction is only payable using the
government created currency then those transacting are unlikely to take the currency risk
arising from transacting in another currency. Charging taxes in this way does, therefore,
impose the use of the state created currency onto a jurisdiction, assuming that its taxes are
of sufficient amount. This then provides a government with the means to control the
macroeconomy for which it is responsible
So, that 75% of the revenue of FTSE100 firms is not in sterling shows that UK taxes are too low then?
And here is the heart of MMT:
Importantly, the above points are all that MMT has to say on the theory of money. In summary,
it says that state with its own currency and central bank can always spend when it wishes without having to either tax or borrow to do so.
But we’ve always known that. Monetisation of fiscal policy, debasement of the currency, take your pick. We had at least one example of it in the Western Roman Empire….
And now we get to idiocy:
A government that can decide when and in what amount it wishes to spend has, in principle, an
unlimited ability to command resources within its economy. As the sole creator of the currency
of that jurisdiction it, above all other economic agents within that economy, has the power to
command that economy to suit its purposes.
No, Because folk can and do use other currencies. Z$ don’t control any resources at all, not even in Z.
That this is true is beyond reasonable dispute. The management of the wartime economies of
the UK from 1939 to 1945 and the USA from 1941 to 1945 provide the clearest possible evidence
of that. When it was required, the state took control of the economies of those countries for what their governments deemed to be a public purpose.
Snigger. Note what they did there. They didn’t use money. They used command and control, rationing and so on. WWII is proof that government cannot control the economy by the use of money alone.
And yes, of course, twat is twat:
The first and last paragraphs summarise the contrast between neoliberalism and MMT, even if
Keynes could not have anticipated that. Neoliberalism claims that all government action is
constrained by a lack of finance as a result of which desirable opportunities must be foregone.
MMT agrees with Keynes in saying that if something can actually be done then it can be afforded
because a government that can create its own financing is never constrained by a lack of money,
although it can be by the availability of resources.
Neoliberalism insists that it is real resources which are the limitation. Because that is economics itself – the allocation of scarce resources.
‘N’ know what? I can’t be bothered with the rest.
The thing that’s inadvertently hilarious is that I think if Stephanie Kelton or Bill Mitchell had the time or inclination to read this cretin’s meanderings they’d probably say he has got it wrong on first principles. But I didn’t need more than 5 minutes (Arguably 5 seconds would have sufficed!)to see that it’s a heap of steaming garbage.
I notice he has changed the name of the Blog to ‘Funding the future’ – to borrow from the Great ‘Legiron’ – if you adhere to his principles, you won’t have any funding or any future as hyperinflation and the complete collapse of the essentials of civilisation will ensue.
Not until governments can’t be voted out of office, though we’re getting ever closer.
“Modern”? It’s as old as the hills. “Spend as much as you like, sire. After all, who’s King around here?”
Because that is economics itself – the allocation of scarce resources
Perhaps that explains the problem with MMT, or at least his interpretation of it. It’s that “M” in the middle. It leads to his belief that the “Money” is the important bit rather than the allocation of the scarce resources it represents.
Definitely B ark
VP
I’ve always wondered what Bill Mitchell thinks of Murphy. If memory serves, they were both speakers on a seminar panel once. I can only guess they did not get along because, Murphy being Murphy, he’s since criticised Mitchell quite strongly on more than one occasion. The link below is highly recommended just to see what an un-selfaware cvnt Murphy can be.
https://[email protected]/Blog/2019/01/18/why-bill-mitchell-is-simply-wrong-on-modern-monetary-theory-and-imports-and-exports/
Some golden extracts:
First, it seems Bill cannot help but be hyper-aggressive.
Second, Bill turns tedium into an art form. Whether on his blog or in person his presentation ability is dire.
Third, and by far the most important, is the fact that Bill is just so often hopelessly wrong.
I will leave aside all the invective in Bill’s response: it is really not worth wasting time on small mindedness.
Given his aversion to flying, we can understand that he has never been to places such as Argentina and Russia, where local people will quite happily transact with you, even prefer to do so, US dollars rather than roubles or pesos. Wven in Cape Verde, I recall that hotels would accept payment in Euros rather than escudos
No, he’s right. He’s absolutely right!!! There really is a magic money tree, of course there is.
Now, all he has to do is find that magic resource tree and he’ll be on to something.
“an unlimited ability to command resources within its economy”
Within its economy. What does MMT say about how the quantity of resources within an economy might vary in response to the commands of the state?
This is pure gold:
Remember… So did the Germans….
And they’re generally considered the Bad Guys in the kerfuffle of that period. By a bit of a margin..
I note he very carefully doesn’t mention the old Soviet Union…
What’s he been smoking?
He’s a cunt and a stupid and fantastically egotistical cunt at that.
I think he probably feeds on the attention Tim gives him, and presumably Tim gets something out of it too.
There was a time when he was threatening to get somewhere influential, and thus it made sense to focus on him, a bit, but his utter inability to rein in his egotistical cuntishness has fucked him (far more than the stupidity) so it all seems rather pointless; it’s like Groundhog Day, with the same basic idiocy repeated and fisked over and over – and over – again.
Idiot is idiot, as Tim might say. News this isn’t.
“When it was required, the state took control of the economies of those countries for what their governments deemed to be a public purpose.”
Public purpose? Merely the survival of the state and it’s apparatus in that current form.
Which may or may not have coincided with what the public wanted.
Anyway, he’s still a knob.
I had to take a look at what else ‘lay beneath’
This one amused me:
The MMT approach to the command of resources is the polar opposite of that in neoliberalism. MMT seeks to do what is possible. Neoliberalism seeks to constrain what is possible.
He’s inadvertently made the point that MMT is precisely what enabled the likes of Mugabe or the Kim’s to impoverish their populations to the extent that millions try to escape. It’s possible to put in high end tourist facilities while your population subsist on insects and grass but I’d question whether that’s a desirable outcome, but in Murphy’s world it’s the way it should be. Reading through the whole thing, though, I am reminded of what the ‘Bloke in Spain’ says – it is Murphy’s world. We merely live in it.