4 ms·

FWIW, the vast majority of all the MMT stuff I've seen ends with stating that because the facts are what they are, the questions about what to do are all policy

FWIW, the vast majority of all the MMT stuff I've seen ends with stating that because the facts are what they are, the questions about what to do are all policy questions. It then does not go on to prescribe what policies to pursue, aside from the fact that the authors of the MMT stuff may themselves have political views expressed elsewhere. I think MMT is best considered to not have any prescriptive component. I see the idea of one more often from critics of MMT looking for something to attack than from MMT itself. That said, I'm just one reader with a limited scope of experience… but my view is that there ought not be prescriptions within MMT, and I'm happy I don't generally see any.

nwah1 9y ago
I respectfully disagree. There are a lot of statements like "deficits are good" and "we need to raise aggregate demand" and "there should be a Job Guarantee." There are strong prescriptive and value-laden keynesian overtones. I don't want to name names, but just search for the "Job Guarantee," for instance, and you'll see lots of writing about it.
- quadrangle 9y ago
  No MMT reasonable person ever says "deficits are good" are some prescriptive statement. The point is that deficits can be good, are often good, and are normal. The message is that having deficits or not should never be considered in itself good or bad, it's only in context that we can make such a judgment. I do recall seeing MMT folks describe "full employment" as a policy goal that the government should have, so you're right there. I think that ought to be left out from MMT. Whether or not that is a good goal is independent from the facts of how fiat currency works. Incidentally, I happen to believe that tying distribution of basic necessities to employment is unethical and economically destructive (it promotes make-work and even destructive broken-window-fallacy type crap).
  - candiodari 9y ago
    You can easily split up the statements, and see things much more clearly. "deficits are good". What are deficits ? Well government taxes X dollars, and governments spends Y dollars, on skyscrapers, computer systems, ... and Y > X. That means 2 things. One, short term, one, long term. Short term there is at least Y - X more demand in the economy. That means more production is needed. That's great ! And no worries, every rightist on the planet will agree with that. More demand, more need for goods. That's great, that's excellent. Long term, there is the problem that the government doesn't produce anything. If the government buys something (with some exceptions like infrastructure that represent like 5% of the budget at best) it's only a user. That means that if I pay $1000 in tax, or buy bottles of whiskey for $950 and drink them all, I have made the same contribution to the economy. Deficit spending means that while I paid $1000 in tax, the government bought $1200 (for example) in bottles of whiskey, and drank them. It used the money for non-productive purposes (in the sense that they won't generate extra economic activity in the future). In fact it's worse, since it's pretty much both throwing $1200 down the drain, in spending that I'm sure someone will enjoy but is ultimately useless, AND $200 in a loan that interest will come due on. But, if demand is anemic, the short term boost can matter more than the long term costs. If instead I spent $1000 buying equipment for a coffee stand near a park in my neighborhood, and run that business, however. People would have access to coffee in the local park, and that would generate income, a job, ... That's the kind of spending we want : spending that grows the economy.
    - quadrangle 9y ago
      > That means that if I pay $1000 in tax, or buy bottles of whiskey for $950 and drink them all, I have made the same contribution to the economy. No, that would be just bad accounting. If you pay $1000 in tax, then there's $1000 less currency. If you consume $1000 in goods, then while there's less of the good, there's likely some profits through the supply chain and anyway the currency goes to the people who supplied the good and exists for them to use again. But the rest of what you are saying is true. The question about spending is always what do we spend on…

nwah1 9y ago

I respectfully disagree. There are a lot of statements like "deficits are good" and "we need to raise aggregate demand" and "there should be a Job Guarantee." There are strong prescriptive and value-laden keynesian overtones. I don't want to name names, but just search for the "Job Guarantee," for instance, and you'll see lots of writing about it.

quadrangle 9y ago
No MMT reasonable person ever says "deficits are good" are some prescriptive statement. The point is that deficits can be good, are often good, and are normal. The message is that having deficits or not should never be considered in itself good or bad, it's only in context that we can make such a judgment. I do recall seeing MMT folks describe "full employment" as a policy goal that the government should have, so you're right there. I think that ought to be left out from MMT. Whether or not that is a good goal is independent from the facts of how fiat currency works. Incidentally, I happen to believe that tying distribution of basic necessities to employment is unethical and economically destructive (it promotes make-work and even destructive broken-window-fallacy type crap).
- candiodari 9y ago
  You can easily split up the statements, and see things much more clearly. "deficits are good". What are deficits ? Well government taxes X dollars, and governments spends Y dollars, on skyscrapers, computer systems, ... and Y > X. That means 2 things. One, short term, one, long term. Short term there is at least Y - X more demand in the economy. That means more production is needed. That's great ! And no worries, every rightist on the planet will agree with that. More demand, more need for goods. That's great, that's excellent. Long term, there is the problem that the government doesn't produce anything. If the government buys something (with some exceptions like infrastructure that represent like 5% of the budget at best) it's only a user. That means that if I pay $1000 in tax, or buy bottles of whiskey for $950 and drink them all, I have made the same contribution to the economy. Deficit spending means that while I paid $1000 in tax, the government bought $1200 (for example) in bottles of whiskey, and drank them. It used the money for non-productive purposes (in the sense that they won't generate extra economic activity in the future). In fact it's worse, since it's pretty much both throwing $1200 down the drain, in spending that I'm sure someone will enjoy but is ultimately useless, AND $200 in a loan that interest will come due on. But, if demand is anemic, the short term boost can matter more than the long term costs. If instead I spent $1000 buying equipment for a coffee stand near a park in my neighborhood, and run that business, however. People would have access to coffee in the local park, and that would generate income, a job, ... That's the kind of spending we want : spending that grows the economy.
  - quadrangle 9y ago
    > That means that if I pay $1000 in tax, or buy bottles of whiskey for $950 and drink them all, I have made the same contribution to the economy. No, that would be just bad accounting. If you pay $1000 in tax, then there's $1000 less currency. If you consume $1000 in goods, then while there's less of the good, there's likely some profits through the supply chain and anyway the currency goes to the people who supplied the good and exists for them to use again. But the rest of what you are saying is true. The question about spending is always what do we spend on…