tag:blogger.com,1999:blog-6245381193993153721.post582730500023219689..comments2024-03-28T17:08:15.784-07:00Comments on Social Democracy for the 21st Century: A Realist Alternative to the Modern Left: Some Serious Criticism of MMTLord Keyneshttp://www.blogger.com/profile/06556863604205200159noreply@blogger.comBlogger19125tag:blogger.com,1999:blog-6245381193993153721.post-48924993878546986102012-08-26T01:44:29.967-07:002012-08-26T01:44:29.967-07:001970s stagflation was not caused solely by the oil...1970s stagflation was not caused solely by the oil shocks, though they exacerbated the situation. <br /><br />See here:<br />http://socialdemocracy21stcentury.blogspot.com/2011/06/stagflation-in-1970s-post-keynesian.html<br />Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-54069857248680137152012-08-25T21:55:30.009-07:002012-08-25T21:55:30.009-07:00The solution would be social environmental policy....The solution would be social environmental policy. If the needed imports are food, figure out if there is a sustainable way to create more food supply domestically. No? Then figure out how to reduce the population so you need less food.<br /><br />Similarly, if the needed import is oil, start retooling the economy to run off of solar power.neroden@gmailhttps://www.blogger.com/profile/07475686367097445497noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-61529845272846950492012-08-25T21:53:45.548-07:002012-08-25T21:53:45.548-07:00It's important to note that most economists sp...It's important to note that most economists spend NO TIME AT ALL analyzing real resource constraints. You have to go to environmentalists to get that sort of analysis.<br /><br />neroden@gmailhttps://www.blogger.com/profile/07475686367097445497noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-21240647763063685592012-08-25T21:51:52.219-07:002012-08-25T21:51:52.219-07:00"The fact that such a country’s national gove..."The fact that such a country’s national government is sovereign in its own currency and can spent how ever much it likes in that currency will not solve the problem – there is not enough goods and services (in this case) food for the sovereign government to purchase."<br /><br /><br />Ah. This is related to my analysis of the 1970s stagflation: I believe it's *entirely* due to the oil shock.<br /><br />If your economy is dependent on an actual resource which you must import -- or worse, which is running out entirely and which you must somehow figure out how to substitute for -- Keynesianism, MMT, none of macroeconomics will do a whit of good. <br /><br />You need environmental policy: your population has to reduce to match your food supply, your production has to be within your solar energy budget, etc. International trade may substitute temporarily for constraints when importation is possible, but in the medium and long run, a real resource constraint must be dealt with by a real resource management policy -- central planning, in fact -- not by broad generalities which ignore the details of the resource.neroden@gmailhttps://www.blogger.com/profile/07475686367097445497noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-6427963574525867782012-07-05T22:33:06.035-07:002012-07-05T22:33:06.035-07:00That's like saying that looking at spending is...That's like saying that looking at spending is only analysis if people are doing it.<br /><br />There is an economic effect of spending and an economic effect of the Job Guarantee, as there is an economic effect of studying the behaviour of people.<br /><br />Just because somebody is strapped to a chair doesn't mean you can't analyse what they would do if their arms and legs were free to move.<br /><br />The attacks on the JG component of MMT analysis, but not the tax cutting suggestions, are based on pure ideological bias. A belief - nothing more.NeilWhttps://www.blogger.com/profile/11565959939525324309noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-2951400389705549752012-07-05T10:50:35.361-07:002012-07-05T10:50:35.361-07:00Neil,
It's only analysis if the actual count...Neil, <br /><br />It's only analysis if the actual country you are talking about already has a JG program. For other states that don't have a JG program and fall under the basic requirements of modern monetary systems, it is about policy.Isaac Izzy Marmolejohttp://radicalsubjectivist.wordpress.comnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-50857938633038540742012-07-03T04:45:00.527-07:002012-07-03T04:45:00.527-07:00"Obviously what is needed and what is not nee..."Obviously what is needed and what is not needed is debatable but the concept stands - once the value of exports is less than needed imports you're in trouble."<br /><br />And you are even in bigger trouble when you keep borrowing in foreign currency to finance this.<br /><br />"The sort of trouble the IMF was founded to sort out - getting a country to that point where exports cover vital imports."<br /><br />are we talking about "vital imports" being something that country cannot function with paying higher prices.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-67175650430536251412012-07-03T03:57:28.026-07:002012-07-03T03:57:28.026-07:00Perhaps because you misunderstand the analysis.
J...Perhaps because you misunderstand the analysis.<br /><br />Job Guarantee is about analysing the effect of employed buffer stocks vs unemployed buffer stocks.<br /><br />MMT says that employed buffer stocks are less risky than unemployed buffer stocks from the point of view of hirers. That reduction in risk reduces costs.<br /><br />The reduced costs allow you to get a higher overall employment level corresponding to a particular level of inflation by deploying employed buffer stocks than unemployed buffer stocks.<br /><br />That's the economic analysis. Social policy analysis then layers other outcomes on top of that (lack of alienation, social cohesion, etc, etc).NeilWhttps://www.blogger.com/profile/11565959939525324309noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-58216450518301067132012-07-03T03:52:44.523-07:002012-07-03T03:52:44.523-07:00The key is whether the value of *needed imports* a...The key is whether the value of *needed imports* are covered by the value of the county's export. <br /><br />Obviously what is needed and what is not needed is debatable but the concept stands - once the value of exports is less than needed imports you're in trouble.<br /><br />The sort of trouble the IMF was founded to sort out - getting a country to that point where exports cover vital imports.NeilWhttps://www.blogger.com/profile/11565959939525324309noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-80432297296949876552012-07-03T03:46:24.219-07:002012-07-03T03:46:24.219-07:00"But that is also the goal of Post Keynesiani..."But that is also the goal of Post Keynesianism, and was a concern of Post Keynesians long before MMT ever existed."<br /><br />I'm sure that the case. We all stand on the shoulders of giants. It's not a contest!<br /><br />MMT moves the debate along to specific enhancements to auto-stabiliser systems. Similarly Steve Keen's work highlights the private debt issue.<br /><br />But ultimately its the same elephant.NeilWhttps://www.blogger.com/profile/11565959939525324309noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-67822670500796809802012-07-03T03:39:51.723-07:002012-07-03T03:39:51.723-07:00"I suggest that ANY GROUP OF PEOPLE living in..."I suggest that ANY GROUP OF PEOPLE living in a specific geographical location who find that the world does not want what they can produce and who have to import essentials are in a hopeless position. That is not a weakness in MMT."<br /><br />I completly agree Ralph. And It doesn't mean that borrowing in foreign currency to run CAD makes their situation any less hopeless. <br /><br />And how do you argue that keeping forex rate artificially high by borrowing in foreign currency is somehow beneficial? You will have even bigger CAD to finance. The CAD financing was the problem in their argument in the first place and now they are saying run even bigger CAD to avoid problems? And what problems? Currency depreciation? what would have happened if Mexican government didn't borrow from IMF in 2008? They say peso collapsed. They didn't even have high enough inflation.<br />http://www.tradingeconomics.com/mexico/inflation-cpiAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-31378094402463715392012-07-03T02:13:09.040-07:002012-07-03T02:13:09.040-07:00Bill Mitchell’s criticisms of MMT in connection wi...Bill Mitchell’s criticisms of MMT in connection with Kazakhstan are flawed. He says “Many of these nations also have very little that the World wants by way of their exports..” And then refers to a country that “is facing continual current acccount and currency issues as a result of the need to import essential goods and services,”<br /><br />I suggest that ANY GROUP OF PEOPLE living in a specific geographical location who find that the world does not want what they can produce and who have to import essentials are in a hopeless position. That is not a weakness in MMT.<br /><br />E.g. if a group of people went to live in the middle of the Antarctic, they’d be in a similarly hopeless situation. The only people actually living in the middle of the Antarctic are heavily subsidised – mainly by the U.S. taxpayer.Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-36309068971503695862012-07-02T20:37:59.095-07:002012-07-02T20:37:59.095-07:00Yes people that use the MMT framework advocate pol...Yes people that use the MMT framework advocate policies but it is not a set of policies, for e.g payroll tax holiday, platinum coin seignorage is only applicable to the US not any of the other suggested nations by Cesaratto.<br /><br />So everything he suggests is misleading at best.<br /><br />MMT is not something that can be implemented, it is an objective analysis of what is and how it functions.<br /><br />I think Lord Keynes provides a good balance in the post (even if he has double posted it) to show that it is misleading (my word, not LKs) and does come under consideration.<br /><br />I disagree with Lord Keynes that MMT is a more radical version of PK, and I know those that identify as PK will strongly disagree with me but MMT is the core of PK. Once we get past the accounting identity and sectoral flows, it shows everything we need to know about macroeconomics is derived from "buffer stocks".<br /><br />It shows it simply, no veil of complex jargon to keep economics elite - no other school of thought does this.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-61555872251532436582012-07-02T16:39:57.426-07:002012-07-02T16:39:57.426-07:00The alternative international payments system advo...The alternative international payments system advocated by some Post Keynesians would be a return to fixed exchanges with an adjustable peg, with the surplus nations obligated to spend their surplus dollars, as in Paul Davidson's proposals.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-6565054453435003902012-07-02T16:29:26.242-07:002012-07-02T16:29:26.242-07:00I find the issue the of exchange rates to be the m...I find the issue the of exchange rates to be the most confusing part of economics in general so I'm having a hard figuring out how a developing country could develop the necessary credit needed to secure foreign resources needed for development of infrastructure and industrial sectors when the floating rate allows for speculators to buy and then short your currency regardless of the real output. <br /><br />In short, floating rates are could be unstable but developing countries need to tie their credit to something that is stable in order to have the credit necessary to secure the real resources for the development that would validate the credit in the first place.<br /><br />The internal demand for currency based on the tax regime can only supply you with so much credit as the physical basis for exports has real limits as does the rate of taxation so the amount of foreign reserves you can buy back is limited. Simply increasing the domestic money supply by fiscal expansion won't help you bring in foreign real resources and neither will increasing domestic demand for the currency. <br /><br />If you a poor agricultural importer with no industrial base like many African countries on what basis do secure long term credit within your own currency? The idea that foreign investors would want your money because that would let them expand their market into your country seems to be a pretty weak basis for the long term credit need to provided lack real production. Real production lets you increase the amount the credit needed to buy that production and thus attract foreign investment but without some sort of promise as to the future productivity I don't see foreign investment. <br /><br /> A fixed exchange rate in a sense is promise of future productivity by the nation by stating we agree that in the future we will buy on your future output at rate tied to the increase in value of our future productive output due to our current consumption of your output which will let you let us borrow in the present at a fixed price in our currency. In short, foreign currency obligations promise one countries access to foreign goods at a consistent rate provided we actually do have increasing real output by both countries. <br /><br />A floating rate doesn't seem to allow for that kind of credit creation. You could say that MMT's definition of monetary sovereignty actually restricts a governments purchasing power to only being able buy what is being sold in their currency. Am I wrong on this issue? I'd appreciate your commentary on this issue. <br /><br />I've wonder why a dual exchange rate couldn't be used as means of having a agreed upon rate while at the same time giving yourself the ability to devalue claims your own currency should speculators try and play rates against each other.Septeus7noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-44339371866008877782012-07-02T14:18:32.653-07:002012-07-02T14:18:32.653-07:00not really.. one policy, for example, that is quit...not really.. one policy, for example, that is quite implied by MMT is a Guarantee Job program. That seems more like policy than analysis to meIsaac Izzy Marmolejohttp://radicalsubjectivist.wordpress.com/noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-37685503334092408212012-07-02T12:16:12.715-07:002012-07-02T12:16:12.715-07:00"There seems to be a lack of understanding th...<i>"There seems to be a lack of understanding that the goal of MMT is to get back to the real limits of the economy."</i><br /><br />In other words, something like full employment.<br /><br />But that is also the goal of Post Keynesianism, and was a concern of Post Keynesians long before MMT ever existed.<br /><br />E.g., Kaldor's attacks on monetarism in the 1970s and Paul Davidson's work in the 1990s attacking neoliberalism.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-40574143543933735222012-07-02T11:45:41.025-07:002012-07-02T11:45:41.025-07:00The main point is that there is a *lack of focus* ...The main point is that there is a *lack of focus* on the balance of payments issue in MMT, much as there is on the government deficit issue. <br /><br />In other words it is lower down the pecking order of concerns.<br /><br />MMT puts forward an appropriate policy for the external account. Don't pay foreigners to hold your government sector financial assets, and make it clear that you intend to 'accommodate' excess savings in the non-government sector.<br /><br />If foreigners choose to hold government sector assets in that light then the risk is with them. You've done as much as you can to discourage them.<br /><br />If foreigners hold private sector assets or financial assets, then the bankruptcy process handles any disruption.<br /><br />Beyond that MMT says concentrate on maintaining domestic output to the level of real resources - essentially countering the attempts by foreign central banks to manipulate your domestic sector for the benefit of their exporters.<br /><br />The external sector should be largely left to float to its natural point - balance between export and imports being preferred but there is no reason to turn away extra imports if foreigners desperately want to give them to you in exchange for fancy pieces of paper.<br /><br />So you're not trying to buy imports with your paper. Other people are desperate to sell their exports for your paper (so they can swap it at their own central bank for example). Again a difference in emphasis - push rather than pull.<br /><br />There seems to be a lack of understanding that the goal of MMT is to get back to the real limits of the economy. Those may be very constrained in certain parts of the world, but there is no need to run *under* even that limited capacity just because of currency fears.NeilWhttps://www.blogger.com/profile/11565959939525324309noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-10065386494200189832012-07-02T10:55:29.351-07:002012-07-02T10:55:29.351-07:00MMT is a framework for analysis, not a specific se...MMT is a framework for analysis, not a specific set of policies that will work for every country in all circumstances. As an analysis framework, it is just as valid for Kazakhstan as for the U.S., but that does not mean that Kazakhstan can pursue the same policies as the U.S. It all depends on available real resources, as any MMT advocate will say.Kennoreply@blogger.com