A common criticism of Modern Monetary Theory is that it is a naïve doctrine of free lunches. … But the critics … caricature MMT as a doctrine of “manna from heaven”…
The “manna from heaven” quote may well be from me. (Dan assures me it’s not specific to me below.) That is exactly what I said recently about MMT as promulgated on an MMT Facebook forum. The timing of this article fits. I don’t know of anyone else who has used that phrase about MMT.
Bernard Lietaer thinks Wray et al are wrong because of systems theory. That is summarized in this graph. MMT theorists are calling for moving us way off to the left.
This article does not correctly characterize my issues with MMT. Previously I criticized MMT advocates who vociferously claimed that MMT means zero taxes on anyone. One of MMT’s leaders, Pavlina Tcherneva, stepped in and said that no taxes idea was wrong.
My problem with MMT advocates like this one (and most of MMT’s theorists) is that they draw on a human nature that does not exist. It is a world free of self-serving politicians with no sociopaths seeking wealth, power and control. They implicitly and explicitly say that government should just spend as needed and everything will be wonderful. Pavlina has at least listened when I said this is exactly the trap of Marxism – a great theory for a fantasy world.
Would anyone here believe for one second that if the US Congress could materialize any amount of money at will – and had significant public and academic backing for it – that the outcome would not be a disaster? You see, MMT advocates think that the money would go to them, that they would ‘get theirs’ along with others in their financial class. But there is no evidence that would happen, and ample evidence it would not.
There is great value in MMT theory. Marxism is relative twaddle, just a minor Ricardian worker model. The MMT analyses are correct in terms of mechanics to a great degree. Where MMTers fail utterly is in their implicit ideas of human nature when they create ivory tower prescriptions. Those prescriptions are, indeed, “manna from heaven”.
Nor do MMT advocates deal head-on with the glaringly obvious problems they already have within their community of adherents. Those adherents speak with religious fervor. They seek the promised land. Most people are never going to understand or deal with complex matters that require mathematical ability. And that is why people advocating for MMT have a cacophony of voices. Something grabs their fancy. Some say “Full employment!” and anything less than full employment means there is not enough government spending. Others say, “No taxes for anyone! Government creates money!” (viz. Mike Norman, a stock analyst). Others say other things.
And nobody in MMT looks at ROI of spending, nor seeks to find methods of mild modification of the current system. What we have in front of us is a massive regulatory failure. And I am well aware that some within the MMT community are happy about that. They see it as an opportunity to unseat a system in revolutionary fashion. This is just a variant on the old communists and anarchists who hope and pray for revolution in the streets so they can gain power. I overheard one last year talking in a cafe about exactly that.
The system we have evolved over millennia. It attempts to balance human/primate greed for power and wealth against the public good. It has done very well, at least within the culture of the West and the near east – certainly when compared to other systems. Private credit as a method of money creation caused European culture and people to explode across the world. But lets be clear about the human motives involved. Just so, let us be absolutely clear about the motives of Wall Street’s “Master’s of the Universe” and what their machinations are for. Those guys are out for themselves. We are already seeing serious problems because they have essentially taken over the executive branch of government. Those guys have been protected by the current and previous administrations. But only Obama has directly run interference to protect them from prison. And that, folks, is what defines a banana republic.
So we already see what those kind of people do when they are too close to and have control over the current central bank and spending process. Mr. Kervick is arguing for above is that all the control systems, all the barriers that still exist be torn down.
That is my criticism. Mr. Kervick’s article, like many in MMT, is arguing with straw men of his own creation. He is not engaging with me, nor with the heart of my criticism.